“Ferrari’s owner, Exor is paying $643-M for a 24% stake in Louboutin, my favorite ladies shoe brand“– Paul Ebeling
Following the news Monday that the iconic Italian Agnelli family’s holding company was investing in the Christian Louboutin brand, after its investment in Hermès International’s China project Shang Xia last December we are now certainly now aware the Ekon (OTC:EXXRF) understands luxury.
HeffX-LTN’s overall technical outlook for Exon is Very Bullish, as the support is deep and there is no overhead resistance. Target 110/share. The stock is currently trading at 85.825 in New York.
An Exor spokesman said the company invests in single companies that are exceptional businesses and whose founders with shared values can add value and build great companies. It is the quality of the company, its Team and culture and its attractive prospects that are the Key drivers of the decision to invest.
Exor purpose is “to build great companies” and that, across all of its investments, it applies this common criteria “Understanding, we invest only when we understand.”
And by owning Ferrari (NYSE:RACE), Exor tells us it understands luxury.
I recall that during its financial markets day held in November 2019, Exor identified luxury and technology as areas of interest.
“Exor is a family holding company and it invests to create value. Families play a very important part in Exor’s investment thinking. Exor has owned the Juventus soccer team for more than 100 years, the same with Fiat, and with Ferrari for more than 50 years. That difference of approach is fundamental and quite unlike a financial investor. Exor brings its deep experience in matters of governance, sharing the lessons of many decades helping businesses to grow and become ‘great’,” our source said.
It is understood Louboutin and The Agnelli Family go way back. “Oftentimes, founders looking at ways to move their brand onto the next phase of development are courted by private equity funds or big groups. That means partnering with a financial investor with a short-term horizon or essentially selling,” continued the our source.
“Christian Louboutin does not want to sell. He is young, he wants to grow and continue his extraordinary journey to make his company great. That’s why Exor is an ideal partner. When you invite someone into your house, it’s a question of trust. Of course, you want to be very careful with your creation.”
Exor is a long-term investor, working with founders and entrepreneurs in partnership. Each holding is very selective, as “it identifies individuals with whom it shares fundamental values. It must be comfortable cohabiting with the leaders of its companies and vice versa. There must be a deep understanding.”
Exor has grown into a giant holding company, reporting revenues of EUR 143.8-B in Y 2019.
In January, after more than a yr of negotiations, its Fiat Chrysler Automobiles (FCA) group and French automotive group PSA completed their merger, combining into a company called Stellantis (NYSE:STLA).
The new automotive group operates in more than 130 national markets with 400,000 employees and comprises brands ranging from Fiat, Maserati and Alfa Romeo to Chrysler, Jeep, Peugeot, Citroen and Maserati. It was a combination masterminded by Mr. Elkann, who has been leading the family holding company for 16 yrs.
In addition, the holding comprises PartnerRe, a leading global pure-play reinsurer; CNH Industrial, which designs and produces agricultural and construction equipment, trucks, commercial vehicles, buses and specialty vehicles for firefighting, defense and other uses.
The Economist in London, and media group GEDI Gruppo Editoriale, which includes Italian newspapers La Repubblica and La Stampa, il Secolo XIX and other local newspapers, several magazines including L’Espresso and National Geographic Italia, the local edition of the Huffington Post and 3 national radio stations are owned by Exor Holdings.
John Elkann is the grandson of the late legendary Gianni Agnelli. He is the Chairman/CEO of Exor.
Exor will be accorded 2 of 7 seats on the board of Christian Louboutin, said the Exor spokesman, and the names of the Exor representatives will be made known at the closing. The low-Key, publicity-shy Mr Elkann, 44 anni, will not be 1 of them.
“This is a very intelligent move so congratulations to Exor for catching this extraordinary opportunity. Christian Louboutin is an extremely appealing brand and this kind of operation would be surely appealing to any investor. This transaction points to a very solid relationship between two families joining forces to grow the brand. It’s a relationship built on trust,” said Luigi De Vecchi, Chairman of Citi EMEA.
“Luxury is one of the most interesting sectors, offering great growth potential, but we should not necessarily infer that this acquisition is meant to build a luxury conglomerate. I see it as a strategic transaction by an Italian group investing in a French brand in a minority position, which is a positive signal for the country. Exor has experience in the luxury sector through Ferrari and it will be able to help Louboutin grow globally,” said Mr. De Vecchi.
Christian Louboutin has long been very well-known in France and around the world, it is very much respected.
A Milan-based luxury goods analyst told us, “…it does look like Exor wants to consolidate its presence in the luxury sector, given Ferrari is part of its portfolio.” He noted that “the luxury sector has shown great resilience in 2020, even though the footwear segment is highly competitive. I also think the fact that they are shifting onto a company that is not publicly listed is a positive element, reducing the potential discount investors could apply to the shares, as the holding becomes more unique and less replicable, creating more interest for investors.”
“I personally find this operation very interesting,” said Alessandro Maria Ferreri, owner and CEO of The Style Gate consulting firm, who also pointed to the importance of family relations and recalling the longtime friendship between Louboutin and Ginevra Elkann, sister of John Elkann, and Diane von Furstenberg, who married into the Agnelli family through Egon von Furstenberg. But, those relationships are not enough and Ms. Ferreri underscored Louboutin’s “incredible business,” his “unique talent and a product that is hugely recognizable. Last but not the least, any woman on the planet who wants to be even more beautiful, sensual and elegant surely wants a pair of Louboutins.”
The brand has much growth potential in the global market and Louboutin has dispelled the myth that women in China or Japan do not wear heels.
Regular readers of this column recall that in Y 2019, Ferrari revealed it was working on a lifestyle project, launching apparel collections to be produced by Giorgio Armani’s manufacturing sites under a long-term agreement. Notably, Mr. Armani has no heirs
Ferrari is The Aristocrat of the automotive sector.
Our overall technical outlook is still Bullish, a Key indicators are Bullish long-term. Ferrari reported strong earnings for Q-3 on 3 November and did the same for Q-4 and F-Y 2020 as reported on 2 February.
Ferrari closed Tuesday 193.03 within its 52 wk range of 127.73 – 233.66 in NY. It’s all time high in NY was marked at 233.66 intraday on 29 December.
A Key technical indicator has turned Very Bullish. Ferrari’s stock is very oversold in here, but the pattern still indicates the confirmation of the break out at 196.01 on 3 November and confirmed.
The Key support is at 193.01 and the Key resistance is at 199.75 at the close Tuesday in NY.
Note: At the beginning of Y 2020 I called RACE at 230 by year’s end, the stock was trading at 165.22 on 1 January 2020, on 29 December 2020 it marked 233.66 intraday, its all time high
The Maranello Outfit’s shares were raised to Buy from Hold at HSBC, and Buys at Morgan Stanley and Bank of America.
UBS is now calling the stock at 365. Citi downgraded the stock from Neutral to sell. I have not seen any other Street downgrades.
Ferrari will continue to create value in the long term as it becomes the world’s 1st Super Luxury brand.
Ferrari is a quality 1st long term luxury products investment, BAML raised its call to 270 long term.
I have raised my long term target to 375, a Strong Bull call, the strongest on the Street and am holding the mark during this recent profit taking, and seeing RACE as a buying opportunity.
Ferrari has an average rating of Buy and a consensus target price at 243.60.
The Maranello Outfit’s shares were raised downgraded from Buy to Hold at HSBC Thursday.
Ferrari will continue to create value in the long term. Ferrari is a quality 1st long term luxury products investment, and I am calling it 375 long term, the Top on the Street, and adjusting it to 250/share short term.
A number of large investors have recently bought shares of RACE, and there has been just 1 instance of insider selling over the past yr that we have seen.
The stock is considered defensive in the sector.
Have a healthy day, Keep the Faith!