[Boxer]

“Let me be crystal-clear, black-and-white: we do not need money.” – Lawrence Stroll Feb 2022

Just posted an article on Aston Martin's latest £653 mil. Equity Raise and Q2 2022 trading update:

Aston Martin’s £653m Equity Raise & Trading Update | karenable

Analysis and insights on Aston Martin's Trading update and announcement of a £653 million Equity Raise.

karenable.com

Comments?

 

[Semitone]

What can one say at this point?

1) Happy I am not a shareholder
2) Makes me feel better about my investments in China and Russia
3) The pain trade continues...as does Stroll's vanity project.

 

[Boxer]

What can one say at this point?

1) Happy I am not a shareholder
2) Makes me feel better about my investments in China and Russia
3) The pain trade continues...as does Stroll's vanity project.

The amount of ego involved is immense

 

[Ashman]

I belong to a club of exotic car owners where I live with about 200 members and the local dealership recently had a launch event for the DBX 707. The club is mostly Ferrari, McLaren, and Lamborghini owners. They were all pretty positive about the DBX in general but the car that got the most attention from the group was a matte black F1 edition Vantage the dealer had sitting there. Unfortunately, that was the first sports car the dealer had been able to get from Aston in about a year. Meanwhile, they had something like six DBXs in the showroom.

I get that the DBX is supposed to be Aston's cash cow, and the dealer told me that they weren't actually having much trouble selling them. However, the fact that Aston has to all but stop making sports cars to make their SUV is a good indicator in itself that they aren't anywhere close to a healthy position at this point.

Strangely enough, the crew in the club seem to think more positively of Aston now that they see them competing in F1. I honestly wouldn't have thought it, but just having the name front and center every couple of weeks has seemed to raise the profile of the brand from an "also ran" like Lotus to more of a first-run exotic brand in their heads. Though, to be honest, I think it would really help if the F1 team could perform as well as the mid-tier teams like McLaren and I'm not sure the brand recognition is worth the price they're paying when they have so many other issues that need resources. However, my anecdotal evidence says that, against logic, it has actually helped the brand...at least with the group I associate with.

 

[Boxer]

Comments on F1 are quite interesting considering Aston Martin isn't actually "competing" they are paying Stroll's privately owned F1 Team GBP 21 mil. to put the Aston name on the car. No different from what they used to do with Red Bull.

 

[Ashman]

Believe me, I'm right there with you. I wouldn't have believed it either, but having a full Aston liveried car just seems to have raised the profile of the brand with those guys.

...Of course, most of them are new to F1 having only gotten into it after watching the Netflix show, so they don't understand many of the nuances. We get together for watch parties and, having been a F1 fan since the early 90's, I'm constantly having to explain the rules and why teams do certain things. So, I guess it doesn't really surprise me that the difference between a "Factory team" and a "Sponsorship" hasn't sunk in yet...

 

[Boxer]

and Stroll has been very good at blurring the lines

 

[Semitone]

Personally, I thought it was better advertising with a winning “ Aston Martin Red Bull” team rather than a losing, also ran “ Aston Martin Cognizant” team but I have heard others disagree. I have also heard others think the green Aston car is better marketing. No, not just Stroll 😀.

I like that Aston introduced the DBX 707, I like the v12 Vantage, although from a marketing standpoint, I would have gone with a split strategy of a GT12 track focused car and a v12 street car because I feel the new car is neither fish nor fowl. I could nitpick the Stroll strategy to death but in the end I want Aston to succeed. I also have no idea how much of this is Stroll’s influence vs residual Palmer or Moers.

It’s clear Stroll is beside himself trying to get Aston upmarket and into the Ferrari league regarding margins and pricing power. Maybe he gets there, maybe he doesn’t.

My biggest Stroll issues are the myriad conflicts presented by the Stroll cross ownership between the F1 team and AML. On the surface it smells as bad as the Clinton Foundation. It’s been said AML has some economic interest ( not just marketing) in the success/profitability of the F1 team. I also believe that AML was suppose to be involved in chassis development and that apparently would also entail funds flowing in the F1 to AML direction rather than vice versa. Overall though, the relationship is murky from what I see in the public filings. It needs to be above reproach. I wouldn’t feel comfortable as a minority shareholder in this arrangement and certainly wouldn’t be throwing good money after bad in a rights offering.

 

[Semitone]

And voila! Just like that, Porsche is part of the Red Bull F1 team. Wasn’t good enough for Aston, ROFLMAO.

 

[Boxer]

My biggest Stroll issues are the myriad conflicts presented by the Stroll cross ownership between the F1 team and AML. On the surface it smells as bad as the Clinton Foundation. It’s been said AML has some economic interest ( not just marketing) in the success/profitability of the F1 team. I also believe that AML was suppose to be involved in chassis development and that apparently would also entail funds flowing in the F1 to AML direction rather than vice versa. Overall though, the relationship is murky from what I see in the public filings. It needs to be above reproach. I wouldn’t feel comfortable as a minority shareholder in this arrangement and certainly wouldn’t be throwing good money after bad in a rights offering.

There is no cross shareholding between AML and AMF1/AMR. All the money flows from AML to AMR and there is nothing going back the other way. At best it is really smelly and for a public company, it should be above reproach and completely transparent.

 

[Semitone]

Obviously things could have changed and the details are sketchy but I thought this was an interesting tidbit in the 2020 rights offering.. ( page 127, bold is mine)

“In addition, the Group has entered into an agreement under which the Racing Point F1TM team will become the Aston Martin F1TM team with effect from the 2021 season. This agreement is for a 10-year initial term and the Group will receive an economic interest in the team. The agreement also includes a sponsorship arrangement from 2021 and for the subsequent four years with commercial terms commensurate with the Group’s current annual F1TM expenditure, renewable for five years, subject to satisfying certain conditions at the time.”

I didn’t go over the doc with a fine tooth comb. “ Group” is AML plus subsidiaries.

 

[Boxer]

The economic interest turns out to be a option to buy shares in the team. To date that has not happened.

 

[Semitone]

Hmm…somehow getting an option, rather than a good thing, just feels like adding insult to injury.