Client looking for an alternative investment? How about a Ferrari?

Client looking for an alternative investment? How about a Ferrari?

Client looking for an alternative investment? How about a Ferrari?

Kidston was born with Castrol in his veins. His father, an aristocratic British naval officer, was an amateur racer, and his uncle was one of the illustrious Bentley Boys, a group of Jazz Age British sophisticates who won the 24 Hours of Le Mans race four times in a row from 1927 to 1930. Kidston grew up in a household steeped in automotive lore and surrounded by sports cars—“always the latest models,” Kidston says. In 1976, when Kidston was 8, his family left Southover House, their manor house in Dorset, England, to become tax refugees in Tuscany, where they owned a 320-hectare (800-acre) farm. Kidston attended private schools in Italy and Switzerland, becoming fluent in Italian and French—language skills that have helped him win European clients over the years.

Among the car collections Kidston has helped build are those of Jean-Pierre Slavic, a Swiss watch industry tycoon with an unparalleled Ferrari stable, and designer Marc Newson. He has also provided advice to designer Ralph Lauren on his collection. Even in a high-gloss industry, Kidston stands out for his marketing panache: He produces professional-
quality short films, often elegiac or whimsical in tone, to promote Kidston SA or specific cars he’s selling. Some are more self-indulgent. A fan of the 1969 film The Italian Job, he searched out Alpine switchbacks that appeared in the movie and re-created scenes using his own black 1973 Lamborghini Miura in 2009. “It shows we are living the lifestyle, not just selling it,” he says.

Besides the Miura, Kidston’s personal collection includes a McLaren F1 supercar, a Mercedes-Benz 300SL Gullwing, a Porsche 911 Carrera 2.7 RS, a 1992 Bentley Continental, and a 1938 Bugatti Type 57C Cabriolet once owned by his father and which he spent years tracking down. He often enters these in Concours events. And he will sometimes drive in what he calls “picnic races,” the kind of rallies where one is more likely to stop for Champagne than a tire change. (These can be harrowing too: He once drove U.S. collector and venture capitalist Bernard Carl’s 1962 Ferrari 250 GTO—currently considered the world’s most valuable model, worth $40 million to $50 million—in a rally. Terrified of damaging it, Kidston was at first reluctant to take it beyond third gear but soon found himself pushing 7,000 rpm and rocketing through the French countryside, his exact speed indeterminate because the GTO, built for racing, lacks a speedometer. “It was utter bliss,” he says.)

Kidston’s clients admire his passion—and his honesty. “Simon is the kind of guy, when he says something, you can rely on it,” says Detlef Hübner, chairman of German packaging and logistics company Deufol and a self-described “petrol head.” Hübner says he shares Kidston’s sensibilities and perfectionism about restoring cars. “If it is a car from the 1970s, it should drive like a car from the 1970s and not like a new one,” he says.

While Kidston disdains the new breed of collector who he says views cars as simply another alternative asset class rather than something to be driven and enjoyed, he says he was twice tempted, in 2007 and 2011, to launch a classic car fund. Both times he abandoned the idea. He thought—perhaps overcautiously, he now says—that the market was peaking; he’d also concluded classic cars were too illiquid to work in a fund unless investors agreed to long lockup periods that the fund’s returns might not be attractive enough to warrant. Storage, maintenance, and insurance eat into potential profits. And taxes are tricky: In many countries, vintage cars can be sold tax-free, but shares in a fund would be subject to capital gains tax.

Dietrich Hatlapa, a former Barings sales director who in 2007 co-founded HAGI, says he, too, is often approached by groups wanting to start classic car funds, but he has never seen a project get past the marketing stage. Hatlapa is reluctant to publicly criticize competing classic car indexes, like Kidston’s. But he says HAGI’s Top Index—which tracks 28 especially valuable marques—is the only one to use a market cap weighting calculation to adjust for the rarity of a model, meaning the escalation in prices for a Ferrari 250 GTO can’t influence the index more than a more prevalent Porsche 911. He also says that HAGI captures a truer picture of the market because it takes in self-reported private sales data as well as public auction figures. Kidston counters that private sales data are notoriously unreliable. (The producers of a third index, Hagerty’s Blue Chip Index, claim it’s more accurate because it’s based partly on insurance underwriting data.)

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