Ermenegildo Zegna stock pitch; New car prices hit an all-time high, while used car prices are crashing; Swan sailboat factory tour and boat for sale
1) Continuing my coverage of the best ideas I heard at last week's Value Investing Seminar in Trani, Italy, I wanted to share my co-host Ciccio Azzollini's pitch for Ermenegildo Zegna (ZGN).
The company was founded in 1910 and has developed a global luxury brand in clothing, footwear, leather goods, and other accessories.
Being from Italy, Ciccio specializes in Italian companies, most of which trade on the Borsa Italiana exchange, but Zegna was particularly interesting to me because it trades on the New York Stock Exchange. It went public via a SPAC merger, which went through in December 2021. Since then, the stocks of most SPACs have cratered... but ZGN is actually up – closing yesterday at $13.59, giving it a $3.3 billion market cap.
Ciccio began his presentation (which you can access right here) by showing a two-minute company video: Our Story. He then made a compelling case that Zegna is a very high-quality company with a moderately valued stock, using these four slides:
2) I'm not quite sure what to make of this, but it's interesting... New car prices are at their highest level ever:
Meanwhile, used car prices are crashing...
...which is helping bring down inflation...
...despite used car supply being at historic lows:
Weird times indeed!
Rather than try to figure it out or predict what's going to happen, I guess the value play here is to buy a used car, not a new one!
3) Early this morning we left Jakobstad, Finland (where my friend picked up his new Swan 55 sailboat) and, as you read this, we're motoring (not enough wind to sail) for roughly 15 hours about 120 miles across the Gulf of Bothnia to Sweden.
Here's a map of the area, with Jakobstad circled – we're going west and a little bit south today:
Yesterday, Mark, a mechanical engineer and Project Manager at Swan, gave me a tour of the facility, which was incredibly impressive.
The folks at Swan are creating enormous, customized works of art that are also technological and engineering marvels (decks made of teak from Myanmar, etc... you get the idea). They range in size from 48 to 128 feet in length, cost $1.7 to $25 million, and take two years from order to delivery (roughly one year of backlog and one year to manufacture).
Here's what the main Swan building looks like on the outside:
On the left is a hull of a new boat, ready to go through the huge blue door on the right. I can't begin to describe the building's scale, but it reminded me of the 1.1 million-square-foot Boeing (BA) airplane assembly facility near Seattle that I visited long ago.
Because much of what Swan does to manufacture its works of art is proprietary, developed over the 57 years since its founding in 1966 (my birth year!), the company normally doesn't allow visitors to publicly post photos from inside the facility... but I asked, and Swan gave me permission to share the next two. The first picture shows two 55-foot boats under construction (the platform is 25 feet in the air, so the craftsmen can work on all sides of the boats):
Note that the one on the left is almost finished and ready to be launched within a week.
In the second picture, Mark is inside the carbon fiber hull of a larger boat that's in the early stages of construction:
The hulls are made from enormous molds like this (Swan has one for each size boat it makes):
To make the hull, which is one piece, the two halves of the mold are bolted together and then the Swan workers put layer after layer of resin and either fiberglass (for the boats up to 78 feet) or, for larger ones, carbon fiber, which is lighter and stiffer (though more expensive).
Then, the entire boat is transferred into an enormous room nearly the size of football field that's an oven that heats up to 90 degrees Celsius (194 degrees Fahrenheit) to melt and bond the resin with the fiberglass or carbon fiber.
So, are you ready to buy one of these bad boys, have $8 million burning a hole in your pocket, and want to pick it up immediately? I'll tell you how tomorrow...
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.