The decision that made me excel as an investor.
My responsibilities as investor relator for IMA taught me which budgetary information and magnitudes investors analyse to maximise their profits. I had become an excellent financial analyst. Just like when a good doctor conducts a diagnosis based on a small amount of information, I felt I knew where to invest using my exceedingly refined ability to observe and read the financial situations and global events in front of me.
I imagined there were many other managers who would be able to conduct that role better than me, and I also didn’t feel I had a propensity for that kind of job. It felt like I was doing the same thing every day and it just wasn’t in my nature. What I had done was seize a big investment opportunity based on a small amount of information, guessing correctly for various investments. The fact that this had taken place within a family business was a coincidence. Of course, it helped, but it was still a coincidence. It turned out that my strength lay in perceiving a business’s hidden potential and knowing how to turn inefficient management into an unlimited source of income.
The success in IMA’s shares no doubt gave me practically unlimited access to credit sources, and so I started to make a series of moderate-risk investments in different industries. It was clear that this didn’t sit well with my potential role within these companies, but I found this role very boring anyway.
One of the first investments I made at that time was in a company that made videogames for PlayStations and PCs: CTO. It was obvious to me that the world of “household” consoles would increasingly gain ground at the cost of amusement arcades, and that it would draw adults rather than young people. I had also predicted the mobilisation of competing companies who would create new consoles on a par with the seemingly untouchable Sony. Seeing the situation today, I wasn’t wrong.
My connections in the banking and business world at the time introduced me to two young men who presented me with their idea about last-minute travel. Life was becoming more and more hectic and the rates of production in the world of work were always on the increase, also given the advent of mobile telephony which was speeding up flows of all kinds. This meant it was becoming impossible to book, for example, holidays and so on well in advance. It didn’t take me long to realise that this was another investment I had to make.
I therefore invested 22 billion lire for 25% of CTO, and 12 billion for a third of Last Minute Tour (the abovementioned last-minute travel company, which practically began out of nothing). I closed other investments and my risk centre amounted to 300 billion. At about 29 years of age, in terms of personal risk capital within Italy, I was second only to Cragnotti, the then president of Lazio football club.
I received the mandate to deal with CTO’s listing on the stock market, and in 2000 I listed it with a capitalisation value of 425 billion, making my 25% worth about 100. About two months later, the value of the company had almost doubled to 800 billion. I could have made a sale and taken all the consequent profit, but because of my principles, which I discussed before, I wished to make good on what I had promised, respecting the contract I signed which contained a 24-month lock-up provision for my capital. There were a thousand ways I could have bypassed this obligation, but I decided against it.
In the meantime, I began the process of listing Last Minute Tour, which was initially valued at 1200 billion. I would have thus found myself with a participating share of 400 billion. However, at the last minute the Stock Market unfortunately denied the authorisation, which had already been granted by the Italian Companies and Exchange Commission. It was July 2000 and the Stock Market took some time to assess how the company would progress in its peak months (July and August) before giving the OK.
But at that time, the speculative bubble linked to the advent of new IT and digital technologies in the world of finance (the so-called New Economy; Tiscali came to be worth more than Fiat throughout those years – can you imagine?) burst and I again found myself dealing with a huge potential loss. CTO lost a great deal of its value and I found myself having to industrially work on Last Minute Tour to cope with this superstructure I had invented so that I could accommodate a possible increase in capital and subsequent growth.
In the meantime, I started to approach other projects, the first of which was the first voluntary Tender Offer ever conducted on Italian soil, for a company called Freedomland. Freedomland was a firm whose business model was internet television; that is, the idea that you could browse the internet using the TV in your own living room, by means of a decoder. This is based on the concept that the Net was a “domestic matter”. Obviously, it had never been this way before, as the internet was a very private thing. In those days the value of companies was directly proportional to the pool of users they could reach. Six months after its listing on the Stock Market it was discovered that this company’s pool of users had been largely inflated through offers that hadn’t yet been seen through with actual contractual arrangements and bogus invoices sent to users. Despite all this, it had already been approved and had generated an increase in capital of several million euros. I remember that the architect of the fraud, the CEO Virgilio Degiovanni, even ended up in prison, leaving a company with a seriously pathetic business model in the hands of a Board of Directors elected by the banks.
If fooling yourself doesn’t do you any good, disillusion is far worse. With two such opportunities and 600 billion in capitalisation, I could have considered ending with 200 billion in profit, even if things went badly. At the time, as a 30-year-old with such an amount, I would have been “loaded”.
Anyway, my Tender Offer was exceeded a few days before the end. This was a rather shady series of speculative events which the Italian Companies and Exchange Commission would later intervene in.
At that point I went in another direction and purchased the largest motorhome manufacturing company in Italy. This manoeuvre was also the result of a simple brainwave of mine: the real estate market had skyrocketed, making it very complicated for people to buy a second home (by the sea or in the mountains, for example). If we further consider the costs of hotels which were also constantly on the rise, the concept of a motorhome was an opportunity that would gain more and more ground. Furthermore, I knew I could count on a kind of loyalty in this field, as motorhomes are not just a physical possession but a tradition that families who are part of this niche pass down from generation to generation.
I invested 108 billion euros in this company, which produced about 7000 motorhomes a year. However, the expenditure I faced was basically “just” 1,800,000 euros, thanks to a leverage system for various debt plans. This system allowed me to gain control with a calculated risk, based on that which, for me, would have meant certain growth. I was the reference shareholder, with 40%.
After two years, when the company had come to produce a good 13000 motorhomes a year, about 6000 more compared to when I joined it, I sold my share to an English fund for 208 million.
I concluded another brilliant operation with a glass manufacturing company, which I bought for 65 million and sold for 109 million, and in which I still have a minority interest today.
Another initiative of mine was Toy Watch, the plastic watch. Even though such an item was usually sold on the beach (something which those around me pointed out somewhat facetiously) I thought this product might take a different sales channel, through the concept of “perceived luxury”. Of course, luxury in its broad sense refers to particular goods that are not accessible to everyone. But I created this new concept whereby even something that is not expensive could start a trend and show off a kind of “luxuriousness”. I was amused by the idea that a person with a plastic watch might feel just as cool as someone with a 50,000-euro watch.
So, I opened a little 15m2 shop in Milan, on via Montenapoleone, setting aside a severance pay of 1 million euros. Only, this shop came to turn over one and a half million euros a year, making me go on to open 40 more outlets in the space of a year and a half, including both directly operated stores and franchises.
My only mistake was to sell, after about 3 years, 49% of the company to an investment fund for 32 million euros. With hindsight, I should have sold all of it and sealed an even bigger deal.
I basically invested in 12 different product sectors, using my intuitions and predictions. All the while I was still the director and shareholder of IMA, a company which continued in its steady growth, although nothing near to what it has reached in the last 7-8 years. I still lived here in Castenaso and had a private helicopter; my life consisted of getting around in it to supervise the companies which I had shareholdings in, although I had no real managerial roles. I left that to those in charge.