Sanlorenzo

In the rarefied world of luxury yachts, where craftsmanship meets wealth, a curious disconnect has emerged. Sanlorenzo, a company that has masterfully married nautical engineering with architectural artistry, finds its stock trading at a mere 6x EBITDA – a valuation more suited to a distressed industrial manufacturer than a luxury market leader with a 17.8% revenue CAGR over two decades. While the market frets over post-COVID demand normalization, CEO Massimo Perotti is quietly increasing his already substantial ownership stake. And I did with him. For value investors, this divergence between price and quality can be an intriguing opportunity.

Massimo Perotti - A Strategic Thinker

• Acquired Sanlorenzo in 2005 after 23 years at Azimut-Benetti

• Holds approximately 60% ownership stake

• Recently increased his position through open market purchases, demonstrating strong confidence in company outlook

• Significant industry expertise and deep understanding of luxury markets

• Known for pioneering the concept of customization in yacht manufacturing

Strategic Innovation: The Architect's Touch

A key differentiator in Perotti's strategy was the innovative decision to bring renowned architect Piero Lissoni into the business as Art Director. This unconventional move has:

• Elevated yacht design to architectural masterpieces

• Created unique interior layouts that revolutionized traditional yacht spaces

• Established Sanlorenzo as a luxury lifestyle brand rather than just a boat manufacturer

• Attracted high-net-worth clients seeking distinctive design aesthetics

• Resulted in award-winning designs that command premium pricing

Recent Insider Transactions

Perotti's recent stock purchases (NOV 2024) are particularly noteworthy for value investors, and this is where I bought most of my shares:

• Demonstrates management's conviction in company's intrinsic value

• Suggests leadership views current market price as undervalued

• Aligns with company's strong backlog and growth initiatives

• Timing coincides with strategic expansion plans

• Shows long-term commitment despite short-term industry headwinds

Investment Highlights

Strong Market Position and Brand Value

• Global leader in 30-40 meter yacht segment for over a decade

• Premium positioning in luxury yacht market

• Diversified product portfolio across yacht sizes and styles

• Strong brand recognition among ultra-high-net-worth individuals

Conclusion

Sanlorenzo represents a compelling opportunity for value investors at current levels. The combination of strong management, market leadership, multiple growth drivers, and attractive valuation creates a favorable risk-reward profile. The recent insider buying by CEO Massimo Perotti, coupled with the company's unique architectural approach to yacht design, reinforces the investment thesis. While near-term industry headwinds exist, the company's strategic positioning and long-term industry tailwinds support a positive long-term outlook.

The current valuation multiple of 6x EV/EBITDA appears to overstate near-term cyclical concerns while understating the company's competitive advantages and growth potential. For patient investors with a multi-year horizon, Sanlorenzo offers an attractive entry point into a market leader in the luxury yacht industry.

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