IN FOCUS: FERRARI ‘ IT COULD BECOME THE LARGEST CAR COMPANY IN THE WORLD’
We think Ferrari will ultimately become the largest car company in the world.
It was a spin-off from the Fiat, the holding group, and spin-offs are often interesting and always worth a look.
Ferrari has a very nice story. But it is very early in exploring the pricing power that it has.
The firm produces 8,500 vehicles in two classes – compared to Porsche, which produces 250,000 cars in around six classes. We’re not saying Ferrari is going to match that, but that it is relatively early in expanding its product range, and we think it will be able to do that without damaging the brand it has built up.
Ferrari has great profitability on selling relatively few units. The thing about a company like Ferrari, as well, is that it is a manufacturer and its gross margin is rather high.
As it scales up, it will become a lot more profitable. It’s a luxury goods company, you cannot come up with a brand overnight that matches Ferrari, so we are confident its competitive advantage is very well protected.
We’ve owned the company for two-anda-half years now and it’s done very well for us – it’s a classic longterm holding. you are spot-on, sometimes you aren’t. But as long as you bend quickly, then that’s fine.
Do you both have your own money in the fund?
How are you compensated?
CM: The incentive scheme our fund managers have is linked to growing the assets of the fund. Coupled with that is a measure of how much risk we take to achieve our performance and that is wrapped into the formula that goes into rewarding the managers.
What would you have been if you weren’t fund managers?
TB: When I was a teenager I was really into fashion. Now I’m investing in fashion retailers rather than working in fashion. So I haven’t totally left all my dreams behind. Moreno: I grew up in the city, and always dreamed of being a farmer. Now I have a smallholding, and what I really like is pigs. So my dream is to focus on becoming a pig farmer as a sideline.