Dear Mr. Berko: I bought 350 shares of Fiat Chrysler Automobiles for my IRA around Thanksgiving in 2012, and I paid under $3. I have 35 shares of Ferrari, and I don’t remember buying the stock, but my new broker tells me I got the Ferrari stock from a merger with Fiat Chrysler. It’s trading at $127 and is worth $4,445, which is more than the $1,100 I paid for Fiat Chrysler.
Several times, when asking my broker what I should do with these two stocks, he said he didn’t recommend them to me so he can’t give me advice on them. Please tell me what to do with these two stocks.
— L.B., Rochester, Minn.
Dear L.B.: Your broker should have himself legally declared a cockroach.
Ferrari N.V. (RACE-$136), a spinoff from Fiat Chrysler Automobiles (FCAU-$15.37), came public in October of 2015, selling 20 percent of its shares at $52. In January of 2016, FCAU distributed the remaining 80 percent of its RACE stock to Fiat Chrysler shareholders: one share of RACE for every 10 shares of FCAU. Your 350 shares of FCAU entitled you to a tax-free spinoff of 35 shares of RACE. Wow!
FCAU is a $110 billion revenue corporation with headquarters in London. It makes passenger cars, trucks and light commercial vehicles under the Jeep, Ram, Chrysler and Fiat names. FCAU also makes and sells the Maserati and Alfa Romeo. And 2018 revenues also include income from auto components such as engine control units, suspensions, shock absorbers, cylinder heads, electronic systems, transmissions, gear boxes and related equipment.