Ferrari’s (NYSE:RACE) CEO Unlocked the Value in the Iconic Supercar Maker
Investors are misreading CEO Marchionne’s objectives, unlocking value is not his goal; he is trying to ease the Agnelli Family, which controls Ferrari and Fiat-Chrysler (NYSE:FCAU), out of the car business.
He is retiring in a few years, and the car business is capital-consuming, low-margin, and depressingly cyclical. The Agnelli’s and their private-equity concerns would like to concentrate on other opportunities going forward.
Back to Ferrari
When Fiat Chrysler Automobiles spun off Ferrari in an IPO in October 2015, there was plenty of skepticism around a Key aspect of the plan, that being increasing Ferrari sales by thousands of cars a year.
Sales had been capped at 7,000 annually, but Fiat-Chrysler’s CEO Sergio Marchionne wanted more.
The risk was losing Ferrari’s aura of exclusivity.
The fears were unfounded, and Ferrari’s stock has been on a Bull Run, up almost 130% over the past year and 80%+ YTD. The iconic Italian automaker has outperformed every other asset in the sector, including Tesla (NASDAQ:TSLA), a bit player in the sector, but a speculator’s darling Vs Ferrari’s emerging Aristocrat status.
Ferrari’s success has encouraged considerable speculation about which brand Mr. Marchionne will spin off next.
Some are betting it is Maserati, which has seen a Y 2017 sales spike thanks to the debut of the Levante SUV. Others suggest Alfa Romeo will be next, I say neither.
Meanwhile, after the breakout Monday, I see RACE at 125/share sooner rather than later.
|NYSE:RACE||112.47||18 September 2017||2.42||111.75||112.76||111.31||506,027|
|HeffX-LTN Analysis for RACE:||Overall||Short||Intermediate||Long|
|Bullish (0.38)||Neutral (0.08)||Very Bullish (0.65)||Bullish (0.42)|