FERRRRARRIIII
I was going to spend this article talking about Joseph Carlson, (a GOATed YouTuber) and his review of super investor moves in this last quarter. I was going to review Ackman’s, Buffett’s, and Burry’s, moves this last quarter, give my take, and parade my genius around their decisions, but a brilliant blast of light caught my mind and ensnared it. I cannot stop focusing on Ferrari. If you have read this website for a while, you know that I have long loved Ferrari, and if I had bought it when I first became interested in the position, I would have a tidy profit by now. But I did not buy. Once again, I must review my thoughts on Ferrari and my fear, and I will come to a decision on my future with the stock.
First, I will tell you something simple you need to know to understand Ferrari. Ferrari is a luxury company. Ferrari sold 15,663 cars last year. Toyota sold 715 cars for every one Ferrari sold. The scariest thing about Ferrari, and purchasing Ferrari stock, is the fear that Ferrari will overproduce and lose this mysterious, opulence it enjoys. Because once a luxury company loses its luxury status, it takes decades to reclaim it. As seen by Kering, the owner of Gucci. You always fear when a company like Ferrari has all this momentum. You cannot help but to see Icarus. I was waiting, waiting, waiting, for the fundamentals to catch up to Ferrari, and that was a mistake of mine. With the intrinsic value formula I use, Ferrari is overvalued by 61%, which makes me not want to buy, but Ferrari has been overvalued its entire existence, using PE, IV, etc. By whatever numerical measure you use, Ferrari is overvalued massively, yet the stock continues to flash upwards, which means that emotions come into play.
When stocks are traded on emotion and consumer sentiment, it can be scary, but that is when you as an investor have to do two things: investigate leadership and trust your own ability. It can be very scary to feel like you are buying at the crest of a tsunami, but in Ferrari’s case, their leadership, particularly their CEO, encourages so much confidence. Benedetto Vigna (10/10 Italian name) is Ferrari’s CEO, and he is great. Vigna is 55 years old, which is young for the CEO of such a massive company, and he has a unique perspective. He was a tech executive in Silicon Valley for years and developed a move-fast and break-things approach that he brought to Ferrari. When he came into power, he immediately crushed as many layers of bureaucracy as he could. This is not to say that he is some reckless, Musk-esque chump, but rather that he seeks efficiency in everything he does. When I first heard about his approach that removed entire teams of people and made the entire leadership structure much flatter, I was worried that meant maximizing profits at all costs, which would lead to my greatest fear: the erosion of the Ferrari brand. A brand that is propping up this massive valuation. But no, this man is as Ferrari as Craig Jelinek is Costco. He will not allow the brand to be eroded.
Investing in Ferrari is a scary proposition. The stock is, by all rational tools, overvalued massively. To invest in this company, you need to have an accurate emotional feel for the stock. I think I am going to invest in Ferrari because I do not think the brand will be eroded, Benedetto Vigna has a great name and genuinely understands how to grow Ferrari, and it is the greatest car company in the world.
In terms of my portfolio, I’m probably going to sell completely out of my Berkshire position and reinvest it all into Ferrari.
