A key focus of the WCM Quality Global Growth portfolio is to find quality global companies with durable, strengthening economic moats and corporate cultures aligned to this growth.
Even during this current volatile environment, Ferrari has continued to drive demand. In this brief update, Brian Huerta from WCM Investment Management discusses why they recently added Ferrari to their portfolio.
Stock in Focus: Ferrari
Alistair Dunne (AD): Hi, and welcome to the Stock in Focus for the WCM Quality Global Growth strategy. My name is Alistair Dunne representing Contango. And joining me today from WCM Investment Management is Brian Huerta.
Brian Huerta (BH): Hi there, Alastair.
AD: One of those stocks in the portfolio that many people will be familiar with is Ferrari. Are you able to give us an understanding of their business?
BH: Well, glad to talk about Ferrari. Ferrari is a high-end luxury performance automaker. Its galloping horse is often synonymous with true high-end luxury status. We really like the company’s strategy of limiting volume growth, instituting really steady measured pace and price increases. And also just staying loyal to the brand and staying close to their customers.
AD: Thanks, Brian. Are you able to give us an understanding of the company’s competitive advantage, and how they maintain the growth of that?
BH: The company’s motto is really emboldened by this iconic brand and their ability to control supply. There’s a long waitlist to get a Ferrari and that’s intentional. They really try to keep a supply and demand balance that enables them to keep those gradual price increases. Customers are also very loyal to the brand, and so that keeps them there on that waitlist, in light of any market environment. We’ve seen this happen over the years where that closeness to the brand and that aspiration keeps the demand there.
AD: Thanks, Brian. Are you able to give us an understanding of the corporate culture of Ferrari and how it supports that competitive advantage?
BH: Ferrari is a source of real national pride for Italians and it’s a place that people want to work. It attracts the best engineers and they all have an interest in preserving the brand. It brings quality workmanship, and it also leads to low employee attrition as well. There’s also something special about Ferrari, with the founder’s family. We’ve found in our work that founders, their families, or their descendants, when they have a stake in the company, they really care about preserving the value of the brand and making sure that decisions are made with a long-term focus. And we have that with Ferrari.
AD: Brilliant thanks so much. I really appreciate your time, Brian.
BH: Thanks, Alastair.