The Daily Telegraph - Your Money - - INVESTING -

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?

CM: Yes.

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.

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