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RACE - Ferrari


Phaceliacapital

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Ferrari Drives a Deal with the Devil

 

  Marchionne needs an SUV for the carmaker to justify its valuation

 

https://www.bloomberg.com/news/articles/2017-08-04/ferrari-and-a-faustian-pact-to-sustain-galloping-stock-price

 

It will be a sad day when Ferrari builds an SUV. As an auto enthusiast we all said the same thing when Porsche came out with the Cayenne, and now it is one of their best selling models.

 

Hey Guys,

what's your take on the fair value of Ferrari?

The recent run-up makes me a bit nervous to be honest..

 

Im also curious abut this. I have had a profitable run with RACE, but feel like I'm flying too close to the sun.

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  • 10 months later...

Ferrari Drives a Deal with the Devil

 

  Marchionne needs an SUV for the carmaker to justify its valuation

 

https://www.bloomberg.com/news/articles/2017-08-04/ferrari-and-a-faustian-pact-to-sustain-galloping-stock-price

 

It will be a sad day when Ferrari builds an SUV. As an auto enthusiast we all said the same thing when Porsche came out with the Cayenne, and now it is one of their best selling models.

 

Hey Guys,

what's your take on the fair value of Ferrari?

The recent run-up makes me a bit nervous to be honest..

 

Im also curious abut this. I have had a profitable run with RACE, but feel like I'm flying too close to the sun.

 

You mention some names that bridged the gap with the brand conundrum, but I would think that a buyer of a Ferrari SUV will not be the same person as a the Cayenne buyer... this is a very different market with very different margins if the brand remains intact. 

 

I don't see why Ferrari wouldn't target better economics than what Ferrari is already achieving.  It wouldn't make sense to take a such a risk.

 

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Notmally, I would think building an SUV would be good short term, but bad long term.  If it's a $200k-$400k SUV, then what makes the price justifiable versus other luxury SUVs? If it's sold at a lower price than Ferrari sports cars, it could hurt the brand by having too many people driving it. Packard was a luxury brand and tried to sell lower priced versions of it's cars, and it hurt the luxury cars it sold.  They sold more lower priced cars, but not enough to make up for the loss of the luxury market and they eventually went broke. Harley Davidson has been struggling recently too.  They now have a several bikes in the $8-$10k range to appeal to millenials.  Given the choice of a $20-$30k "Harley" or a "Harley" for half that price, which would you choose? I wasn't smart enough to buy RACE after the spinoff, but I did well with FCAU.  If anyone other than Sergio Marchionne had come up with this idea, I would say "never!" but he's the Batman of the car world and he can work miracles. 

 

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I think Ferrari should consider building a unique off road vehicle if anything. The risk of brand dilution is quite real however. Ferrari could also consider buying another luxury brand to venture into different markets segments without the risk of diluting their brand.

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It will be 300k - 500k.

 

Top of the range. They sell 200k porsche suvs globally and 5k bentleys and 4k lambos. Lets say they sell 3k FUVS at 400k a pop on average. Should be higher. 1.2bn of revenues at 80 pct incrementals is another 1bn of ebit... Think market can support more probably too. They will gain new customers that they dont already have....

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It will be 300k - 500k.

 

Top of the range. They sell 200k porsche suvs globally and 5k bentleys and 4k lambos. Lets say they sell 3k FUVS at 400k a pop on average. Should be higher. 1.2bn of revenues at 80 pct incrementals is another 1bn of ebit... Think market can support more probably too. They will gain new customers that they dont already have....

 

Is the $300-500k your guess or is there something out there indicating pricing?  My first though would put $500k on the lower end?

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  • 1 month later...

Anyone know of the reputation and record of the new Ferrari CEO, LOUIS C. CAMILLERI?

 

http://corporate.ferrari.com/en/about-us/executive-officers

 

Seems like his record is the record of Phillip Morris -> Altria Group -> PM International. An entire career in the cigarette business. Maybe Ferrari was the only gig he could find with even more loyal customers

 

has Camilleri has been on vacation since 2013? any other reason why he was chosen instead of someone already on the team who worked closely w/Marchionne? 

 

this doesn't sit right w/me...

 

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  • 1 month later...

I am less impressed with the financial allocation and guidance than the design of the new Monza SP1 and SP2

 

Dividends increased to 30% of net income and buyback s 1.5B Euro (~$1.75B USD)... so we'll see a $1 dividend and over a four year period the company will buy back less than 7% of its shares at today's price

 

I hope that the plan is not indiscriminate to price...

 

Guidance is for increased capex for purpose of launching hybrids, FUV, and V6 engine production...a Ferrari with a V6?

 

It would be awful if Ferrari did what Lamborghini did with Urus. 

 

Ferrari is a wonderful company with an incredibly valuable brand...I intend to go through the presentations in full, but a glance, this is disappointing

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Anyone know of the reputation and record of the new Ferrari CEO, LOUIS C. CAMILLERI?

 

http://corporate.ferrari.com/en/about-us/executive-officers

 

Seems like his record is the record of Phillip Morris -> Altria Group -> PM International. An entire career in the cigarette business. Maybe Ferrari was the only gig he could find with even more loyal customers

 

I spoke with someone who has worked for Altria and has owned cigarette stocks for long periods. He told me Camilleri was a great capital allocator and was very good at judging people. I think before we start writing him off we need to remember Sergio never ran a car or a luxury company before either. Also what is the biggest reason we own Ferrari stock? Sure Sergio was great for his insights and new direction, but does it really take Sergio to be relatively successful at reaching the 2022 plan? If the answer is yes, should we really own the stock?

 

 

 

has Camilleri has been on vacation since 2013? any other reason why he was chosen instead of someone already on the team who worked closely w/Marchionne? 

 

this doesn't sit right w/me...

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Anyone know of the reputation and record of the new Ferrari CEO, LOUIS C. CAMILLERI?

 

http://corporate.ferrari.com/en/about-us/executive-officers

 

Seems like his record is the record of Phillip Morris -> Altria Group -> PM International. An entire career in the cigarette business. Maybe Ferrari was the only gig he could find with even more loyal customers

 

has Camilleri has been on vacation since 2013? any other reason why he was chosen instead of someone already on the team who worked closely w/Marchionne? 

 

this doesn't sit right w/me...

 

I spoke with someone who has worked for Altria and has owned cigarette stocks for long periods. He told me Camilleri was a great capital allocator and was very good at judging people. I think before we start writing him off we need to remember Sergio never ran a car or a luxury company before either. Also what is the biggest reason we own Ferrari stock? Sure Sergio was great for his insights and new direction, but does it really take Sergio to be relatively successful at reaching the 2022 plan? If the answer is yes, should we really own the stock?

 

 

+1

 

I don't own Ferrari directly since since I sold and rolled the proceeds into FCAU; however, I do hold a good bit of Exor and trust those guys to have done their due diligence on the CEO running a company they control. Similar to your points about Sergei. The fact that it's suggested that he is an excellent capital allocator and a good judge of people is huge. Carnegie built his wealth by being good in just those areas.

 

As long as Camilleri is smart enough to surround himself with people who do know cars/Ferrari while gets out of their way and intelligently allocates capital to the best opportunities they put before him, we should all be fine.

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  • 1 month later...

Q3 presentation

 

http://corporate.ferrari.com/sites/ferrari15ipo/files/2018_11_05_-_ferrari_-_q3_2018_results_presentation.pdf

 

one time adjustment boosted EPS by E0.74, but longer-term, debt pay down has been material despite lower FCF

 

the two Icona and new 488 Pista Spider should provide a lift to 2019 sales and some temporary margin expansion

 

pricing hasn't recovered from Marchionne's unfortunate death, but the business is running on all cylinders and continuing to hit 2018 targets

 

there is certainly some apprehension about the FUV...I don't see any mention in the presentation but haven't listened to the call yet

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