Leading supplier of solutions for combustion, hybrid and electric vehicles, BorgWarner, Inc. (NYSE:BWA) also weighed on performance, declining -13.78% in the quarter. Uncertainty around tariffs and concerns that we are at the peak of the automotive cycle have weighed on shares. Additionally, the CEO announced his retirement furthering investor skepticism. We continue to believe that BWA’s scale, global presence and leading edge technology properly position the company to deal with these potential issues. We expect the increased complexity required for auto manufacturers to meet higher fuel efficiency and lower emissions requirements worldwide to provide a tailwind to demand for BWA’s products. At current levels, the company is trading at 9.6x forward cash EPS and a 35% discount to our estimate of private market value.
From Ariel Funds' Ariel Focus Fund second quarter 2018 shareholder letter.
