Periodically, we like to revisit some of our picks as an exercise in assessing our own processes. Stock picking is hard. And since we are all trying to improve, it’s a good idea to regularly check in on your thesis and make sure it’s still intact and that you aren’t succumbing to your own biases by staying in a position where the thesis is broken.

Believe me, I’ve been a victim of this many times, but I know I’ve improved significantly as an investor by constantly trying to poke holes in my thesis to see where I could be wrong. After all, Munger says a year is wasted if you don’t destroy one of your most cherished ideas.

So today, I’m going to look at how our investment in The Intrinsic Value Portfolio in Exor has played out. I’m going to examine whether it’s still on track to generate shareholder value, how their position in Ferrari has worked out, and take a closer look at Lingotto, one of their most exciting newer business segments.

— Kyle

A good deal is a good deal, and as the team behind this newsletter, we’re obligated to let you know when good deals arise.

That’s why we’re interrupting your regularly scheduled company breakdown to let you know about something special: On September 19th, Shawn, Daniel, and Kyle will be hosting an all-day conference in Midtown Manhattan dedicated to Intrinsic Value.

Blocks away from the financial center of the world, we’ll be reigniting the spark behind fundamentals-based investing, uniting value-driven investors from all walks of life and corners of the planet. And we want YOU to be there alongside us.

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To best understand where we are today with Exor, we need to understand where we started. And the Exor thesis is simple, really. It’s a business trading at a steep discount to its net asset value (NAV). Since many of its assets are publicly traded businesses, you can just add up the value of its assets, and technically, that’s what the businesses should be priced at.

But public markets don’t always do what we want them to do. In Exor’s case, the business traded at a very steep 60% discount to its NAV when we first bought it.

There were a few reasons for this. First, many investors see Exor as a way to buy Ferrari at a steep discount. Exor owns 21% of Ferrari’s shares, which are worth around the same price as Exor’s entire market cap. Yet, it’s not as simple as being a pure alternative to just buying Ferrari shares. With conglomerates, it’s not uncommon for Mr. Market to discount the stock relative to the net asset value (NAV) of the business, because not all the holdings are of equal quality, nor do conglomerates have great track records of incrementally allocating capital to create shareholder value (i.e., bloated conglomerates are messy and few people, with the exception of Buffett, have proven they can invest well across many different industry niches).

For this, and other reasons, you should never expect the discount to fully close, where the market value of the stock exactly equals the sum of the individual valuations of each of its assets.

But that’s the beauty of this hypothesis.

Theoretically, even if Exor can keep compounding the value of its assets at low-single-digit rates, all you need is for the gap between the company’s intrinsic value and market price to close to generate more-than-satisfactory returns. Historically, this gap has averaged at around a 30% discount to NAV. So if the gap closes from its current 60% back toward a more justifiable 30%, you can earn nearly a double for simply buying something that the market has made obviously too cheap.

The most interesting part about Exor still is its stake in Ferrari. And Ferrari as a stock has had a pretty odd year so far. First, the business dropped 8% in a day following a product launch of its brand-new EV. The Luce was announced, and observers seemed pretty shocked at what they saw, and not in a good way.

But the narrative has now swung the other direction.

To understand why Ferrari shares fell, then rebounded, we have to make sure we really understand Ferrari’s storied history. For most of Ferrari’s life, it’s been a business focused on making internal combustion engines. The ones with revving engines and very powerful performance. Aesthetically, they also followed a model of looking sleek. But they weren’t practical cars.

In other words, Ferrari was a carmaker that didn’t follow traditional rules. So when they came out with the Luce, a car that deviated from much of Ferrari’s DNA, the market didn’t perceive it very well. Former Ferrari CEO Luca di Montezemolo certainly didn’t help things, saying: "If I were to say what I really think, I'd be doing Ferrari a disservice. We risk destroying a legend, and I'm truly sorry about that. I hope they at least remove the prancing horse from that car." That's about as brutal a review as a former CEO can give his old company.

After this, the bear case for Ferrari wrote itself, albeit in a very superficial way. I can only assume the market thought Ferrari wouldn’t be able to sell the Luce to new or current Ferrari customers. And since Ferrari traditionally gets 85% of its business from repeat customers, if its current customer base didn’t like the car, shareholders were nervous that new buyers wouldn’t either.

Except this narrative had no basis in reality. First off, within the first month of the Luce announcement, the shares rebounded from the drawdown, basically erasing the short-term selloff. Part of this newfound bullishness was simply following the facts. The Luce had reportedly sold out of its initial allocation in China within about a month!

From what I was able to find, some journalists went back to check whether this was true, and apparently there were still models available, but it was very clear that there was a major rush to buy the Luce in the Chinese market.

And whether it sold out in the first month is actually irrelevant today. On July 30th, Ferrari reported that Luce’s 2026 production volume of less than 500 vehicles had already been allocated within two months of its debut!

The press can get things wrong, but the CEO of Ferrari will have insights into the Luce that the press would never have access to. Benedetto Vigna, Ferrari’s CEO, said on the latest earnings call that Ferrari received orders from current and new customers. Most importantly, he mentioned that the backlog for the car extends out until the end of 2027.

This, I think, was a great reminder that the market is a voting machine in the short term. Without the data we now have on the Luce, perhaps the market was right, for a very short period of time, that the Luce wouldn’t find a market. But now that the market can see that demand for Ferrari’s vehicles remains high, I think Ferrari is going to keep compounding.

The next part of the Exor equation to ask, since the thesis is built around Ferrari, is: what do we think about Ferrari’s future growth? Has it changed at all since we analyzed it, and does that impact our bet positively or negatively?

Ferrari released its 5-year plan last October, and actually, our estimated revenue growth rate is in line with management's guidance. While growth in the low double digits isn’t the most exciting—we can find higher growth elsewhere—it’s still very hard to replicate the quality and moat of a business like Ferrari.

From our analysis, we don’t think much has changed regarding Ferrari’s intrinsic value. Its multiple has compressed down from 57x, which, in hindsight, was richly priced, even with how good a business Ferrari is. And even in our original financial model for Ferrari, we set the exit multiple in the 30x range anyway, so we expected Ferrari’s valuation to moderate.

And to investors who disliked the direction that Ferrari was going in regarding EVs, they’ve changed their tune. Initially, management guided that roughly 40% of sales by 2030 would come from electric vehicles, but they’re now putting that number at 20%. Since their electric vehicle sales appear healthy, I’m ambivalent about the change in that number.

While it’s been the Luce dominating the headlines for Ferrari, it’s crucial to remember that Ferrari isn’t a one-model business. They’ve been very busy this year, releasing the Testarossa Spider, a hybrid with over 1,000 horsepower that goes from 0 to 100km/hr in just 2.3 seconds, retailing for about $600k.

They also released a “low-end model,” which I say jokingly, since the price is still $300k. This model is called the Amalfi Spider. It’s an interesting model, making Ferrari meaningfully more inclusive than some of its models that are 10x the price.

If we look at the numbers that Ferrari released for Q1 2026, we can get some helpful data on their popularity. We can see that Ferrari sold a total of 3,436 units, with an additional 3,366 units in Q2. If you annualize this, you get roughly 13,600 cars, putting sales around the company’s historical pace, but slightly below their numbers for the first quarter of 2025 and 2024. But much of this softness appears planned, as management noted that multiple models are in the ramp-up phase and that the reduced product count reflects dynamics in planned production rather than any change in consumer demand.

Ferrari isn’t Ford. They aren’t in the business of flooding the market with new models. So I trust management in this statement, and I expect we will see production numbers meet historical norms here over the coming quarters and years. We have to remember that Ferrari is very intentional about how many cars it releases, which is generally over a five-year time frame. Ferrari has capped the F80 at only 799 units, and these retail for about $4 million a piece.

A much less glamorous story of Ferrari’s balance sheet caught my eye while I was revisiting the business. It was how well they had managed inventory. When you only have to sell ~14,000 units per year, though, I guess inventory management becomes a lot easier!

If you contrast this with an automaker like Ford, you can see just how much more stable Ferrari is.

They don’t have to rely on the hype around mini cycles in EVs or on customer preferences. They gradually increase their inventory regularly because demand for their vehicles doesn’t seem to dip. Look at how COVID had virtually no effect on them. Because of this, they have very stable working capital, which doesn’t cause large swings in their cash-generating ability.

One possible area of concern for Ferrari is the impact of US tariffs on sales. Tariffs have disrupted many businesses simply because they pass the added fees on to customers.

But we have to remember that Ferrari customers aren’t your normal customers. And Ferrari isn’t your average company. Management felt they had learned how to deal with it since it had been in place over the past year. They’ve offset some of these additional costs by focusing more on product mix and customization. In their Q2 earnings call, they noted that new cars are seeing higher personalization rates — north of 20%, which adds high-margin revenue that helps offset tariff costs.

And for anyone counting out there, Ferrari’s EBITDA margins have continued to rise, albeit by a small amount, to 39.1% vs 38.8% a year ago, thanks to an uplift in operating margins.

As of writing this, Ferrari’s shares are trading at a price-to-earnings ratio of 38 times. We can invert that to get an earnings yield somewhere in the 2.6% ballpark. This means that if Ferrari decided to buy back its own stock, it would earn a 2.6% yield. This isn’t exactly attractive when you consider that Ferrari’s ROIC exceeds 20%.

So this begs the question: does it make sense for Ferrari to do buybacks as part of its capital allocation strategy, or are dividends the better choice? Given Ferrari’s superb ROIC, the best option would be to reinvest all excess cash back into the business to continue earnings growth at 20%. If only business were that easy!

The problem is that, as we know, Ferrari is very intentional about keeping supply below demand. This is why they sell most of the cars that they manufacture. They could theoretically manufacture more cars, but that would increase supply and diminish the exclusivity that makes Ferrari, Ferrari, and we’d see that weigh on their pricing power over time.

So, since it’s not possible for them to significantly reinvest into the company, the most logical choice, in my book, is to pay a dividend. This isn’t the route I usually choose, but given Ferrari’s premium price tag, it makes the most sense. If their shareholders can earn 3% or more in dividends, which doesn’t seem very hard given today's bond yields, then a dividend is the most logical capital allocation decision.

As you can see from the above figure, the payout ratio has steadily climbed, and as an Exor shareholder, that’s not the worst thing to see, as Exor has shown the ability to allocate capital well and grow net asset value (NAV) at over 12% per annum over the last decade.

But the real problem with owning Ferrari through Exor is that Exor, of course, has its own capital allocation strategy that has nothing to do with Ferrari. When Ferrari pays Exor its dividend, Exor shareholders do not receive that dividend.

Instead, Exor receives those dividend payments itself and makes new capital investments as it sees fit. And this, folks, is why the discount to NAV exists. It’s pretty rare for a business with many different types of assets to trade at a premium; not everyone can be as successful in numerous areas as Alphabet.

So what ends up happening is, yes, we get to own Ferrari shares at a massive discount when we buy them through Exor, but we have to question what exactly it will take to close the discount to NAV. There’s a middleman between us and our shares, and that can come with costs.

One of my favorite case studies on this is Tencent — a business I previously owned that I considered high-quality.

When I bought Tencent, I knew I could also own it at a steep discount by buying shares in the conglomerate, Prosus, which held a significant stake in the company, mirroring the relationship between Exor and Ferrari. But instead, I just bought Tencent shares. And the reason was simple. Tencent was complex enough on its own to understand, and I didn’t want to further complicate it by owning another business with a bunch of other assets I would also need to educate myself on.

While prepping for my episode, I decided to check if the discount had closed for Prosus and its NAV. And unfortunately, 5 years later, the gap hasn’t really closed. If I look just at the Tencent position, it’s worth about 110 billion euros, whereas Prosus itself trades at about 80 billion euros. I mention this because it’s a good reminder that these gaps often don't close, or take much longer than we’d like, which comes with opportunity costs.

One of the tail risk narratives around Ferrari has nothing to do with the Luce or tariffs; it’s more, shall we say, generational. Since 1983, the share of 18-year-olds in the U.S. holding a driver's license has fallen dramatically from about 80% to 59%. And if we zoom in a little further, it gets starker: only about 25% of American 16-year-olds have a license today. The facts are as follows: cars are

And now that we have cheaper alternatives like ride-sharing via Uber, it has taken some of the urgency out of getting behind the wheel at all.

If you're a vanilla car brand like Toyota, that trend is probably keeping you awake at night, and it's part of why mainstream automakers are pouring money into autonomous vehicles. But Ferrari's buyer base is small, wealthy, and specific, at roughly 14,000 individuals a year, underpinning a business worth tens of billions. So broader shifts in car ownership among teenagers barely count as a near-term risk.

If cost is what's pushing an entire generation away from driving, that's simply not a factor for someone willing to shell out millions for a brand-new Ferrari. This is a risk that exists for the auto industry broadly but is largely irrelevant for Ferrari specifically, at least on any timeline worth underwriting today.

It’s easy to forget that I’m discussing Exor today, given how much I’ve discussed Ferrari. And while we still own Exor primarily because of the Ferrari ownership stake, I still think it’s worth having at least a cursory look at a few of Exor’s other assets.

First off is Stellantis, the owner of some pretty well-known vehicle brands like Jeep and Dodge. 2026 hasn’t been kind, with shares now down about 50% year-to-date. There’s a new management team in place, which is usually a signal that the board and shareholders have lost patience with the previous team. And the market’s reaction suggested that a change was probably necessary.

Another asset of Exor’s is CNH, the agricultural and construction equipment maker that competes with John Deere, which has done fairly decently this year, up 17% so far. Koninklijke Philips, however, has been flat.

So the picture inside Exor’s non-Ferrari public holdings isn’t the greatest this year, but it looks like perhaps the worst is now over. A 50% drawdown in a large position is always going to be a pretty big drag on the portfolio. But it’s not all bad; this year Exor has simplified things by divesting from its stakes in Iveco, GEDI, Lifenet, and NUO. Combined, these sold for about €2 billion for Exor at a 1.4x multiple on invested capital. Given how much vehicle manufacturing exposure Exor already carries through Ferrari and Stellantis, trimming Iveco signals that the business is becoming more concentrated while also diversifying away from excess auto exposure.

If you want the most interesting story inside Exor for 2026, it’s not Ferrari, and it certainly isn’t Stellantis. It’s Lingotto, Exor’s in-house asset management firm, which most investors have barely paid attention to. But this is probably a mistake.

And there is a simple data point we can look at to see how management thinks about Lingotto: The business has been mentioned much more frequently in their IR decks, simply because it’s performed so well. The business is relatively new, having been established by Exor in 2023. But in only 3 years, it’s gone from an afterthought to something management wants shareholders to be well aware of. And that’s because AUM has tripled during that time, up to about $10 billion today.

When I first saw this figure, I was impressed, but I was also pretty skeptical. Because AUM scaling up doesn’t necessarily mean that the business has performed well, it could simply be the result of an inflow of new capital. In that case, any increase in AUM becomes much less impressive. But management stated in their 2025 annual report that much of the increase has actually come from investment returns rather than from capital inflows.

They highlighted one of their funds, Intersection (one of four), a concentrated long-short public markets fund. If you’re looking for more information, good luck! They seem to be pretty tight-lipped about it, probably because they don’t want to crowd their trades.

Using Whale Wisdom, I was able to see the top holdings inside their public filings. I don’t know which fund they belong to, though. Teva Pharmaceuticals, Carvana, Paramount Skydance, Valaris, and NovaGold Resources hold the top five positions. I want to highlight Teva and Carvana. If we look at the performance of these since Lingotto’s 2023 inception, Teva has been a 4-bagger, and Carvana has been roughly a 42-bagger. If you have a concentrated fund and a few winners like this, you basically guarantee exceptional results.

Exor doesn’t disclose Lingotto’s fee structure, but we can do some back-of-the-envelope math to estimate it. If we assume a 1% management fee on $10b in AUM, that’s roughly $100m in annual recurring revenue. Yes, I realize the portfolio is currently going through an up cycle, and when things normalize or if we go through a correction or bear market, AUM will shrink, but still, this is a decent business.

If we also assume they are taking 20% of profits, that adds an additional $240 million in performance fees in 2025. Hedge funds tend to have relatively high margins because they benefit from economies of scale.

If you put this all together, 2026 hasn’t been a bad year for Exor fundamentally — Lingotto is becoming increasingly significant (in a good way), and Ferrari has proven its resilience in the places that matter the most: order book, margins, and pricing power. This has happened while the market has punished them in the area that matters only in the short run: sentiment.

But as we’ve seen, the shift in sentiment has had little basis in reality. The market said the Luce was an undesirable car. Yet all the data points to this being sold out for the next 1-2 years, proving demand is very much alive. We continue to be quite happy betting on Ferrari’s future.

As for Exor, it’s a bit of a mixed bag. It goes without saying that we love the Ferrari asset. Lingotto looks like a decent recurring revenue engine, but the other assets don’t excite us very much. But that’s the thing about Exor: we’re effectively getting these other assets for free. If they do well, we benefit, and if they don’t, well, they’re baked into our margin of safety.

In that sense, nothing has really changed in our thesis, and we intend to hold the business as long as the discount exists in excess of 40%.

To listen to our discussion of Exor, or for more company Deep Dives, check out our podcast here.

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