Ferrari’s (NYSE:RACE) Sergio Marchionne’s Greatest Achievement

Ferrari’s (NYSE:RACE) Sergio Marchionne’s Greatest Achievement


Sergio Marchionne is widely credited with rescuing Fiat from long-term crisis and turning it into one of the world’s fastest growing automobile companies. He became CEO in Y 2004 saying he would need to 2X its sales in order to make it financially viable.

Within 2 years he had returned it to profitability and in late Y 2006 it paid dividends for the 1st time since Y 2002. It was achieved via what Fiat called ‘a clean break with the past’ meaning CEO Marchionne jettisoned non-core businesses and pursued a strategy of targeted alliances after successfully negotiating Fiat out of a broader alliance with General Motors, and getting it to pay $2-B.

It was his intellect, perseverance and leadership that saved Fiat.

Sergio Marchionne (dec) arrived as Ferrari’s (NYSE:RACE) Chairman (via Fiat-Chrysler) in late Y 2014 and on the F1 front declared that ‘we have got to kick some ass and we’ve got to do it quickly’, promising plenty of aggression and risk taking.

His while his style was not to everyone’s taste, just like in the auto industry it was associated with results.

After a trying Y 2014 season well off the pace, as early as 2015’s 2nd round Ferrari had against many expectations came back to being a race winner. By Y 2017 it was a front-runner and championship challenger, and that it how it remains today.

CEO Marchionne was noted for his sharp automotive industry observations and was not afraid to be an iconoclast. Perhaps never more so than in his highly-regarded presentation given in Spring of Y 2015 titled “Confessions of a Capital Junkie, an insider perspective on the cure for the industry’s value-destroying addiction to capital”.

His message was that car manufacturers spend more money on product development and create less value for customers and shareholders than any other industry investing billions for often small profits. And that as structured the industry was unsustainable and that consolidation is required. It was delivered to analysts over 30 mins with his typical flair and incisiveness.

Ferrari reported strong Y 2018 results and fundamentals are supported by the product mix and demand. Ferrari is categorized as an auto OEM, but should be and is now being seen as a luxury goods maker.

Although the shares trade at 31X Y 2019 earnings and the stock is not misunderstood by savvy analysts and investors, there are a range of value drivers which support it Northside potential.

HeffX-LTN overall technical outlook for RACE is Bullish to Very Bullish in here there is very little resistance here and none above 140.26.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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