Ferrari NV (RACE) Update: Floor It by Greenwood Investors
We’ve posted a new note in The Grove updating our research on Ferrari. Given disclosures made by the company over the last month, we’ve upgraded our near-term earnings profile of Ferrari. We now expect EBIT to double in the next 12 months, and surpass €1 billion by 2017, two years earlier than we had initially expected. By next year, Ferrari will have best-in-class EBIT margins, besting out LVMH, Prada, Richemont and Burberry. We’ve also included more information on the jet/helicopter interiors market, which Ferrari will be entering by 2017. We believe the company will be announcing a partnership with Finmeccanica’s AgustaWestland helicopter unit, which also happens to be our second largest position after Fiat-Ferrari. Shares are now trading below the IPO price, and represent a compelling recession-proof opportunity in the next 12 months.
We’ll be posting a publicly-available note for Fiat-Chrysler in the coming weeks. Backing out the value of the RACE shares we’ll receive on 1/4/16, FCA is trading at a 4% discount to distressed and beleaguered Volkswagen, even excluding the massive charges the company will be taking. We’ve also upgraded our earnings estimates for FCA in 2016 given stronger-than-expected results coming out of Latin America. All other regions exactly matched our estimates, which were significantly above an unintelligent consensus.
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More
Ferrari’s Updated EBIT Margin Progression