We recently published a list of Warren Buffett Disciple Guy Spier’s 10 High Conviction Stock Picks. In this article, we are going to take a look at where Ferrari N.V. (NYSE:RACE) stands against Guy Spier’s other high conviction stock picks.
Guy Spier’s Aquamarine Capital Management is a Zurich, Switzerland-based investment manager that employs the same long-term oriented, value investment approach as Warren Buffett, who Mr. Spier proudly considers himself a disciple of.
Spier earned a degree in philosophy, politics, and economics from Oxford University in 1988 and followed that up with an MBA from Harvard Business School. Foollowing that, he spent several years working as a researcher and investor on Wall Street, including stints at Braxton Associates and Buffett’s Berkshire Hathaway, the latter of which inspired him to launch his own value investing fund in 1997.
Spier is noteworthy in the investment world for his $650,100 lunch (alongside Mohnish Pabrai) with Warren Buffett in 2007, which was purchased through a charity auction. Spier took several important lessons from that meeting, including the necessity of saying no, and ultimately wrote a book about his takeaways from that lunch and his broader investment journey entitled ‘The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment’.
Mr. Spier makes all of his firm’s investment decisions himself and is an even more ardent value investor than Buffett, holding on to many of his positions for several years without touching them. In the second quarter the fund added two small new positions to its 13F portfolio while otherwise leaving the rest of it untouched. Its 13F portfolio held $263 million worth of assets on June 30, 74% of which were invested in finance stocks.
Aquamarine’s total return stands at 874% since inception through the end of 2023, or 9% annually, outperforming the S&P 500’s 717% returns during that period. Spier’s fund hasn’t been as successful in recent years however. It returned 18.7% last year, which underperformed the market, the sixth-straight year it’s failed to top the market. 2000, 2002, and 2006 were three of the fund’s strongest years, as it beat the market by more than 20%.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). That’s why you should pay close attention to this important indicator.
A classic Ferrari sports car against a lush green hillside, symbolizing the company’s luxurious performance.
Ferrari N.V. (NYSE:RACE)
Value of Aquamarine Capital Management’s 13F Position (6/30/2024): $24.5 million
Number of Hedge Fund Shareholders (3/31/2024): 26
Hedge fund ownership of Ferrari N.V. (NYSE:RACE) dipped by 21% during the first quarter to sputter to a 3-year low. Aquamarine Capital also trimmed its Ferrari stake by 25% during Q1 to 60,000 shares, the only position it made a move on during that quarter. It maintained that position throughout Q2.
The luxury sports car maker grew revenue by 16% to €1.7 billion ($1.85 billion) in the second quarter, while a strong 39% margin contributed to impressive profitability metrics of €670 million ($731 million) in EBITDA and €413 million ($451 million) in net profit. CEO Benedetto Vigna noted the positive reception for Ferrari N.V. (NYSE:RACE)’s new sports car models during the company’s Q2 earnings call, and added that the company’s order book has strong visibility into 2026.
Ensemble Capital Management pointed out the positive impact Ferrari N.V. (NYSE:RACE)’s pricing power has had on the stock in recent quarters, as noted in its Q1 2024 investor letter:
“Ferrari N.V. (NYSE:RACE): With the company’s utility vehicle, the Purosangue, sold out despite being priced much more aggressively than many investors expected, investor attention has been turning to the company’s long term ability to raise prices. With the business’s earnings power being regularly revised higher by investors who watched the company navigate COVID and inflation easily, the stock has been on a tear.
Ferrari has had a very successful run since we first bought shares in the company in 2017. It has been one of our most successful investments since, with shares rising over five times, and understandably so given how phenomenal this business is and how well it has been managed.
Initially spun out of Fiat (now Stellantis) in 2015, it was a rare jewel within the parent company, where its value was hidden among more standard and premium cars sold under brands such as Fiat, Alpha Romeo, Maserati, Chrysler, Jeep, and others. Under the leadership of the astute business manager Sergio Marchionne, who had run Fiat since 2004, Ferrari came to be recognized as the undervalued and unique asset that it was within its parent…” (Click here to read the full text)
Overall, RACE ranks 6th on our list of Guy Spier’s high conviction stock picks. While we acknowledge the potential of RACE, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RACE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
