The Intrinsic Value Podcast - The Investor’s Podcast Network

MI Rewind: Pricing Power & Ferrari Stock w/ Arif Karim

Jul 28, 2023

Arif Karim, senior investment analyst at Ensemble Capital, discusses the importance of pricing power, Costco's spectacular pricing power with low margins, the investment case for Ferrari, and the concept of idiosyncratic businesses.

55:13

Episode guests

Arif Karim

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Ferrari's strong pricing power allows the company to grow beyond the rate of inflation and provide added value to shareholders.

Adequate pricing power in a company indicates a competitively differentiated and valuable business that can grow revenues and profits beyond the rate of inflation.

Ferrari's idiosyncratic business model, based on exclusivity, emotional experience, and limited supply, contributes to its pricing power and long-term prospects.

Deep dives

Ferrari's Pricing Power and Exclusive Models

Ferrari is a company with strong pricing power, selling exclusive and limited-edition models to a loyal customer base. The most exclusive models are reserved for their best customers, creating high demand and increasing their value. Once a Ferrari is delivered, it immediately becomes worth more due to the difference in supply and demand. This pricing power allows Ferrari to grow beyond the rate of inflation and provide added value to shareholders.

Introduction

2min

The Importance of Pricing Power and Its Relation to Inflation and Input Costs

11min

Costco's Pricing Strategy and Leverage in the Value Chain

6min

The Exclusivity and Pricing Power of Ferrari

18min

Building a Community of True Fans

4min

Ferrari's Idiosyncratic Business

15min

Connecting with the Guest and Inviting Them Back

2min

Clay Finck chats with Arif Karim about the importance of pricing power, the investment case for Ferrari stock, and much more!

Arif is a senior investment analyst at Ensemble Capital. Before joining Ensemble Capital, he was a senior investment analyst and co-portfolio manager at Kilimanjaro Capital.

IN THIS EPISODE, YOU’LL LEARN:

00:00 - Intro

02:03 - The importance of pricing power for a company operating in an inflationary environment.

04:06 - How an investor can determine whether a company has adequate pricing power or not.

09:39 - Why Costco has spectacular pricing power, despite their very low margins.

15:52 - The investment case for Ferrari.

38:58 - What an idiosyncratic business is.

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
Check out Ensemble Capital’s Blog: Intrinsic Investing.
Related episode: Listen to MI149: Peter Lynch & GARP Investing w/ Robert Reynolds, or watch the video.
Related episode: Listen to TIP376: The Value Of Netflix w/ Arif Karim, or watch the video.

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