#12 - 2019 Summer Summary
“Paralysed by uncertainty” is how I would less eloquently surmise the last 3 months. Like most major UK asset classes, Brexit, recession fears and a fragile global macro backdrop have definitely sunk their talons into the investable modern sports and supercar market. What’s more, with no near term solution on the horizon, the stalemate is likely to continue for some time to come.
It’s a fairly lacklustre backdrop being painted we must admit. That said, fortune most definitely favours the brave and the weakness we are currently witnessing in the modern classic car market does bring with it some compelling entry points for buyers looking to put cash to work.
Cross Currency Arbitrages – Currency volatility creates cross market mispricing and we continue to look for opportunities to exploit it. Selling into the relative strength here will be key so UK registered LHD examples of high conviction vehicles such as Ferrari 430 Scuderia’s and manual Audi R8 V10s are great to get your hands on. You’re buying in a deflated and unloved UK market but your ability to exploit EUR strength means a quick flip into a European buyer on the continent could be fruitful exercise. Again we continue to think RHD Renaultsport Clio V6s are undervalued versus their LHD equivalents in Europe and expect that pricing discrepancy to vanish as RHD Clio’s catch a bid.
Flight to Quality – Cynics have long complained that Porsche GT valuations are overdone. We are now beginning to see cracks appear as dealers offer down even the most resilient 997 GT3 RS and 4.0 models. Don’t be fooled though, the bid remains as deep as the many diehard Stuttgart fans pockets so any temporary weakness in prices here needs to be exploited…….schnell.
Contrarian Conviction Views – the stuff that everyone loves to hate always sells off the hardest when the market takes a dip……so buy a McLaren. We kid you not, this maybe the most pertinent thing we say all year but take advantage of this weakness to buy one of these incredible Woking built cars. Whether it be a 12C, 650s, 675LT or even a Senna, you won’t regret it 2 years down the line as these cars begin to appreciate in value.
Botttom line, our view is people are long cash and under levered but lacking the conviction or appetite to pull the trigger and buy automotive assets. Trying to bottom tick the market is a fruitless strategy as we don’t believe any meaningful sell off is coming and if you snooze, you will ultimately miss the chance to exploit the small correction we are experiencing. So while our government can’t tell its left hand from its right……buy modern classic cars.
Happy Motoring,
CC’s Investment Team