Ferrari: Manufactures Art

Steven Wood presented his in-depth investment thesis on Ferrari (NYSE: RACE) at Best Ideas 2016.

Ferrari, according to Steven, “manufactures art”. The company’s shares have just spun out from parent Fiat Chrysler, and have caught technical selling pressure as shorter-term owners of an auto company trading at 2.55x EBITDA (FCA) sell out of a company valued at 12x. Steven believes this represents a near-term opportunity as the company’s ramp in deliveries and “limited edition” vehicles will mean that operating income more than doubles (with a possibility of tripling) over the next couple of years. As it does, operating margins will transition to best-in-class in the luxury space, where it is currently fairly valued. Steven views demand as recession-proof. He believes that using 2016 EBITDA Ferrari is already pricing in a global financial crisis.

About the instructor:

Steven Wood, CFA founded GreenWood Investors in late 2010 based on core beliefs that great returns are generated through a concentrated global portfolio of special situations and deep value opportunities, and cannot be generated by being overly concerned with month-to-month returns. We believe investors should have full transparency and liquidity and we share our research with our sophisticated investors, who in turn provide invaluable insights that help us hone our portfolio. Prior to founding GreenWood Investors, Steven worked with notable investors at Carr Securities, Kellogg Capital Group, and Aslan Capital in distressed, deep value, and special situations strategies. Through frequent marathons and by being the sole US-focused analyst in Leveraged Finance at RBC Capital Markets during the peak of the LBO boom, Steven has developed a high pain tolerance, a pre-requisite for value investing. Dissatisfied with just one view of the world, Steven received a bachelor of arts from Tulane University in Economics, Political Economy, and International Relations.

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