benjamin1978

q2 release The Company is exploring various alternatives to reduce our economic exposure to GAMCO resulting from our interests in its stock and the GAMCO Note.

is there recording of the IPO roadshow?

oh my.

So why not just buy back stock now? Why worry so much about less than 1x of industrial leverage? Just because every other carmaker has net cash, except Fiat - but haven't they already decided that RACE is not a carmaker anyways but a luxury goods company?

They really should just cancel the dividend

Last question, really appreciate sharing your thoughts. What do you think is the normalized capex for this business. 375 mm seems like a lot for a company that makes less than 10k cars and basically no need to build new capacity? what are they capexing on exactly I think the answer lies in the massive Formula 1 team expenses. The attached screenshot is from the 2015 annual report. My view is that the money spent on Formula 1 should be viewed as capitalized marketing expenses. Here are two more relevant quotes from the 2015 annual report: "Our name and history and the image enjoyed by our cars are closely associated with our Formula 1 racing team, Scuderia Ferrari, the most successful team in Formula 1 history." "We focus our marketing and promotion efforts in the investments we make in our racing activities, in particular Scuderia Ferrari’s participation in the Formula 1 World Championship." No I think most of the F1 stuff is expensed as R&D on the P&L. But you're right there is a capitalized R&D component included in capex which sounds like basically product development costs. Which is why i feel like is important to know whether product-related costs scale up or down as they increase SKUs

Last question, really appreciate sharing your thoughts. What do you think is the normalized capex for this business. 375 mm seems like a lot for a company that makes less than 10k cars and basically no need to build new capacity? what are they capexing on exactly

I think 3% is their net interest margin, after cost of financing. In the case of captive auto finance, it actually tends to be a pretty good business and Ferrari brand just makes it more so. IMO lending against a Ferrari as an OEM is very low risk, basically no competition unless you allow the dealers and charge them a fee. Kind of like free money. If you have access, please ask them how good of a deal they've gotten from FCA.

To clarify, you mean R&D is going down by 100 mil by end of 2017? Interesting, thanks for the info I didn't make it to the IPO. But what do you think they sold financial services for? I hope it's many multiple of book value. I disagree the ROIC on that business is low though....they basically finance it entirely with debt, very little equity in that business, charge 3, 4% rates and i'm guessing basically nobody defaults, or even if defaults the collateral is sold at healthy prices given it's Ferrari. I hope they didn't sell it cheaply, I think they wouldn't, but I wish they would disclose the terms before the deal closes.

It already is and always has been low margin hardware, particularly on the passenger vehicle side, don't think anyone is making respectful margins BMW, Daimler, Porsche, Audi, Ferrari have pretty good margins, however the value lies either in the brand and proprietary hardware know how. The latter is going to be less important going forward, which I think could hurt the margins of luxury car makers. Who cares about having a sporty car, if they don't drive any more. Maybe not an issue for the super luxury cars like Ferrari, but certainly for the likes of Mercedes, BMW or Lexus. But which one of these you listed is a fair comp to FCA / GM / Ford? That said, Jeep is good.

it is exactly a public market LBO

How committed are they to keeping fixed costs fixed? It's been steadily increasing and run-rating above 600 this year. Plus all the capitalized stuff is going to show up in amortization at some point, and incrementally the costs of producing higher number of SKUs too. Also, with how Scuderia is doing, if Malone takes those extra fees away from the team wouldn't RACE profitability take a hit? Perhaps if you're right the upside outweighs all the headwinds but i'd be curious to know the full picture Also, what about selling Financial Services? That's actually a very good business why is the deal a good thing for Ferrari?

also, what is your source of the 90+ incremental margins. Is this just your belief or there's data behind it

That is all very impressive sounding but what exactly makes you think they're going to do a supercar every year let alone 3 - 5 LTDs each year? Doesn't that defeat the whole point of limited editions? Is this even possible from a design capacity perspective?

Also, what are your thoughts on the FCA Bank transaction. Thx