Ferrari (RACE): Manufacturing Art by Greenwood Investors
In anticipation of Ferrari’s (RACE) IPO, we’re posting our research on the company for our investors. Our One Pager is available to all, and feel free to request a report if you’re keen on the subject.
In a Nutshell:
Ferrari N.V. (RACE) has no equal. Yes, Mercedes is currently on the first place podium on Formula 1, but its products depreciate in value and the company is susceptible to recessions. Like the limited edition LaFerrari or Enzo, shares of Ferrari offer a rare chance to invest in a truly unique opportunity. Scarce are the companies that manufacture products that appreciate in value over time, yet all of Ferrari’s limited edition vehicles produced over the last two decades have appreciated in value at a significantly faster rate than the stock market. Because the company has been slow to address the insatiable demand for its V12 products, for which waiting lists are two years long, Ferrari is embarking on a very gradual increase in vehicle production from 7.2k vehicles to 9.0k a year. Such an increase will bring >60% incremental profit margins and will more than double the company’s operating income to over €1 billion. Just like its vehicles, its shares will have a limited availability of 10% at first, and are ripe for a luxuriously rich valuation. With EBIT more than doubling, Ferrari won’t disappoint even the optimists. Buying shares of Ferrari is akin to owning part of Château Lafite Rothschild, or Jeff Koons. Through our investment in FCA, which we will own at a negative cost-basis, we are able to own one of the world’s most powerful brands without paying the typical scarcity premium. We are happy owners of this modern artist.
Limited Edition Vehicles have All Outperformed the S&P 500
The Business Is Recession-Resistant:
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