Aston Martin (LON: AML) (OTCPK: AMGDF) shares are up 12% on the news that the Yew Tree consortium has bought another 3 and a bit percent of the equity. What’s not entirely clear is whether this is the concert party (which is what Yew Tree is, legally) has bought the shares in the market or whether they’re subscribing to a new issue. The assumption we’re making is that this is a market purchase. And that doesn’t, not really, mean all that much for the share price. They’re not just a concert party, they’re insiders. So there can’t be any insider information driving the purchase. Sure, it’s nice that they’re making this vote of confidence. But it’s not new money to AML, it’s just an increase in the total position owned.
The announcement: “The Company announces that it has been informed that on 28 September 2023 certain members of the Yew Tree Consortium have agreed to purchase an additional 26 million ordinary shares in the Company. As a result of this purchase, the Yew Tree Consortium will hold a total of 26.23% of the Company's issued ordinary share capital.” As we say, that doesn’t look like new funding to the company, that’s - as far as we can tell - secondary market purchases. Therefore, as we say, nice but not a change to the underlying business.
Aston Martin share price from Google Finance
As we’ve said before about Aston Martin: “Aston Martin (LON: AML) has long been a triumph of hope over reality. The car business - not this corporate form, AML - has been bust 7 times already after all. It's a great brand, has value as that, but the actual business of making cars under that brand hasn't been a happy time for capital owners over the past century or so. The latest attempt to get Aston Martin back on the road hasn't run smoothly either. Ever since Lawrence Stoll brought it back to market at a now near unbelievable £4 billion valuation it's been downhill - with the occasional unsustained leap upward - since then.”
Of course, the claim is now that the corner has been turned etc. Mercedes bought in, then Geely, but still at AML: “Aston Martin Lagonda shares are up 12% in London this morning on the back of a deal announced with Geely. That Geely, the Chinese car manufacturer, is taking a significant stake at well above market prices is interesting enough. But there is a coda to the deal, which is that it also reduces the Yew Tree stake, which is partly where Lawrence Stroll's interest lies. So we have both a buy in and new capital and also a reduction in the stake of the controlling shareholder.”
Our basic problem over Aston Martin is that we just don’t believe that car manufacturing can be done on a small scale. We love the cars themselves, but the business line simply not so much.
