Dear MJ Copiers Club,
What a beautiful day! :) We are up 1.8% for the day, with such leaders as $AMS.ZU (AMS AG) growing 6.61%, $RBS.L (Royal Bank of Scotland) 5.85% and $SPR (Spirit AeroSystems Holdings Inc) nearly 10% currently in the US. What is more, yesterday I exited the shorts on the indices - being informed day and night played a big part in this. Perhaps more importantly, we realized over 50% gains on a portion of Porsche Automobil Holding SE with the actual profit (not on paper!) of 53.36%. Very happy with that and if you look at my history of buying this stock, you'll understand this well.
With that, it's time to move to $AML.L (Aston Martin Lagonda Global Holdings PLC). This is a hot stock right now and we're in the middle of playing the "skim the poor guy" game - just to be politically correct ;-) Folks in finance would say it more "brutally". Now, this is becoming the biggest risk in the portfolio, but again, see my Porsche strategy. I very strongly believe in the Aston Martin brand and here are a few reasons why:
1. I spent all weekend researching this particular stock. I was able to arrive at a credible brand value. It's $2B (and yes, I took 50% drop in brand value in 2020 as a calculation)! Now, at current market cap of $700M - just the brand value is 3X of Market Cap. In other words, if you strip Aston Martin fo all assets, its brand is still strong enough to justify an increase of the price by 3x. (I do believe this stock will reach 180 in the next 24 months). Think about James Bond movies. Think about British Heritage. For me, this is even stronger than any government help would be. Aston will not need it and if it did - can you imagine such a brand vanishing from our day-to-day lives? I wonder if there's a single one of you who can.
2. In January of this year (2020), our Canadian billionaire friend, Lawrence Stroll, took a 16.7% stake in Aston Martin for 182 million euro (thus valuing Aston at $1.23B) and also included a 318 million euro cash infusion through a new rights issue, for a total of 500 million euros. In March, the revised deal brought a total capital raise to 536 million euros, with Stroll's investment fund, named Yew Tree, taking a larger 25% stake in the company. He said very important words: "Whilst the immediate outlook looks increasingly challenging, I remain fully committed to the future of Aston Martin Lagonda and look forward to implementing our plans once the fundraising is complete." He backed this claim by bringing 75.5M euros in short-term funding to help Aston cover its cash-needs. Now, I'm not yet a billionaire, but having interaction with HNW individuals, I noticed that they usually don't put money on a deal that loses them almost 50% in a quarter. Do you think Lawrence is different? It's a rhetorical question :)
3. Have a look at the hot-off-the-press today's article in the link below. Toto Wolff is speaking with Aston Martin. Now, bear in mind that he made a personal investment in Aston Martin 2-3 weeks ago :) The Austrian bought a 4.77% stake in the manufacturer for 37 million euros. That's exactly what I would do if I had 100M to invest. Now, please note that Wolff and Stroll are close friends. You connect the dots :)
Now, perhaps I'm oversharing, but those of you who read it can take their own decision. I was relatively quiet about it as I was doing tons of research and wanted to keep buying low. I will most likely not buy anymore, purely because I do not want to put your portfolios at risk. Most of you (20/23) have loyally stayed as Copiers even seeing a 3% drop in my performance (about -1.5% down this month at the time of writing, and overall up over 3% in the last 2-3 months). I thank you for that. We're here for the long-term and I think Aston will bring more than Porsche. I may be wrong, thus only 6.55% of the portfolio invested, but if you have money that you can risk - you may consider what I wrote above. Hope this adds value to my fell-w e-Torians.
With very best regards,
MJ
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