Formula one is worth about $8 or $9 billion, as the sport’s owner CVC confirmed it has this week sold a 21 per cent stake to new investors.

News of the sale coincided with the launch of pre-marketing ahead of one of the biggest ever sports floatations, data by the financial experts Thomson Reuters shows.

“It’s cheap compared to Facebook,” chief executive Bernie Ecclestone told reporters on Tuesday, confirming that the Singapore IPO looks set to go ahead soon “with no dramas”.

“All the things that have to happen have happened. It will be finished by the end of June,” the 81-year-old is quoted by the Telegraph.

F1′s new one-fifth owners are US managers Waddell and Reed, the powerful Blackrock and Norway’s central bank Norges.

“It’s a great way to start the IPO and lets investors know what they can expect,” said Ecclestone.

The diminutive Briton said he is keeping his 5.3 per cent stake, and staying in charge. His former wife Slavica controls another 8.5pc, the news agency Bloomberg said.

“You might as well have asked Frank Sinatra who he would appoint to replace him,” Ecclestone insisted.

CVC said in a statement that is remains F1′s biggest and controlling shareholder.

 Pedro de la Rosa has defended the viability of struggling HRT, despite its new owners trying to build up a formula one team in the mist of a near-unprecedented economic crisis.
The unemployment rate in Spain has spiralled past 20 per cent, and yet owners Thesan have taken on the task of rebuilding the former Hispania team following the departure of boss Colin Kolles and all the infrastructure.

The F112, bearing more than a striking resemblance to the Dallara-designed 2010 and 2011 car, was launched recently with a new livery but only two visible sponsors.

Asked whether it is a good time to push ahead in Spain with a formula one project, lead driver de la Rosa said: “Any moment can be good.

“There is a large labour force in Spain, highly educated and motivated people, young people pushing hard and experienced people.”

But in formula one, money is the fuel and it’s difficult to come by at present.

“This is a time of crisis,” de la Rosa acknowledged to DPA news agency, “and also it has been noticed in formula one and budgets have gone down.”

He admitted, however, that HRT will have to attract more backing in order to survive.

“If the (financial) injection does not come, it is going to be difficult,” said the 41-year-old. “We need sponsors, investors who believe in the project, to help us to grow.

“It’s obvious, we need it, but first we need to build a foundation so it can be seen that it is profitable to invest in our team,” he added.

F1′s owner CVC Capital Partners has confirmed that Rupert Murdoch’s News Corporation and the Ferrari-linked Exor company have made a “friendly” approach.

News Corp and Exor SpA, controlled by the Agnelli family and with a significant shareholding in Ferrari parent Fiat, confirmed jointly on Tuesday that they are “formulating a long-term plan for the development of formula one”.

CVC responded by insisting the potential takeover consortium knows F1 is “not currently for sale”.

“CVC recognises the quality of Exor and News Corporation as potential investors, but any investment in formula one will require CVC’s agreement and will need to demonstrate that it is in the interest of the sport and its stakeholders”, added the London based private equity firm.

Since news of the consortium’s interest in F1 broke, the sport’s chief executive Bernie Ecclestone has said repeatedly that CVC does not want to sell.

“You would think if somebody wanted to buy it they would approach the people who own it to see if they want to sell it,” he told the Press Association.

The British Racing Drivers’ Club (BRDC) insists it has not run out of money to complete sweeping renovations at its British grand prix venue Silverstone.
The circuit-owning BRDC announced on Thursday it is seeking investors to help realise “the full potential of Silverstone”.

A new pit and paddock complex is being constructed at the Northamptonshire venue, and there have been rumours that money is running short.

But the BRDC insisted that if a “suitable investor” is not found, “we will continue with the development ourselves, albeit at a slower pace”.

Some observers interpreted the announcement as a desperate plea for more money, but BRDC chairman Stuart Rolt dismissed that view.

“You can see our accounts every year and they will tell you we are making money,” he told the Telegraph.

“If there’s one thing I want to get across it is that the rumours of impending financial peril are complete rubbish. These are exciting times,” he added.

Plans for a formula one race on the Balearic Islands are still progressing.
Mid last year, it emerged that Llucmajor, a short drive from Mallorca’s major Palma airport, was the likely site for the project, which would replace the European grand prix at Valencia.

The German-language Mallorca Zeitung reports that organisers are now seeking investors to fund the first race in 2012, with the estimated cost at between 160-200 million euros.

“The project would help not only the local community but give the whole island a tremendous economic boost,” said Llucmajor mayor Joan Jaume.

The track’s local designer Gabriel Palmer has been criticised for his inexperience, but he said he has consulted with the Ferrari team.

“I have included their (Ferrari’s) corrections in my current draft,” said Palmer.

The head of the Balearic racing federation and mayor Jaume have already met with F1 chief executive Bernie Ecclestone, and F1 event guru Philippe Gurdjian has reportedly also been involved.

“Ecclestone was enthusiastic and encouraged us to pursue the project,” said federation president Agustin Arbex.

He also revealed that September 2012 has been earmarked for the inaugural race date.

Boss Franz Tost has denied the latest reports about the likely sale of the Faenza based team Toro Rosso.
It has long been rumoured that Red Bull mogul Dietrich Mateschitz wants to sell the energy drink company’s second team.

The Swiss newspaper Blick on Monday reported that Toro Rosso is set to be bought by Arab investors.

“There is no truth in that story,” Tost told the German website motorsport-magazin.com.

The addition of Bulgaria to the F1 calendar could mean the end of the sport’s Hungarian and Turkish rounds.

That is the claim of organiser and Bulgarian motor racing official Bogdan Nikolov, who said this week that a contract for a debut race in 2012 could be signed as soon as next month.

The news follows a scandal earlier this year, when Abu Dhabi investors reportedly reacted furiously to funding claims about the Bulgarian event.

But Nikolov insists the Arab investors are still interested in the project, suggesting that the scandal was more due to “competitive” interests.

“If there is formula one grand prix in Sofia, there won’t be races on Istanbul Park (in Turkey) and (the) Hungaroring. We will be the only grand prix in eastern Europe,” he told the Sofia news agency Novinite.

Joan Villadelprat on Monday insisted he has not given up on bringing his Spanish Le Mans team Epsilon Euskadi into formula one.

The Spaniard tried to acquire the thirteenth and final team entry for 2011, but the FIA ruled that none of the applicants had the financial resources to justify the go-ahead.

But Villadelprat told the Noticias de Gipuzkoa that the 13th entry is not the only route into F1.

“We have not thrown in the towel,” he confirmed.

“The most important thing in formula one is the funding that allows you develop for the long-term. We already have the infrastructure and human capacity.

“We are still working with a range of investors and we hope soon to have a final decision,” added Villadelprat. “If the decision is positive, we have a range of options.

“We can go for the 13th entry in 2012, or for 2011 buy an existing team.”

He ruled out buying the struggling HRT team.

“We are not in contact with them,” said Villadelprat, with decades of experience in F1 with Ferrari, McLaren, Benetton and Prost.

“But we are confident that there are licenses available, because there are several teams in a very delicate economic situation,” he added.

“If we secure the budget for the next four years to take over the project of one of these teams, we will — otherwise, no.”

A deal to host at least seven Russian grand prix in Sochi beginning in 2014 has been reached, the country’s president Vladimir Putin announced on Thursday.

“An agreement with the (sport’s) organising company has been reached,” he told investors in the Black Sea resort city, according to the state news agency Ria Novosti.

F1 chief executive Bernie Ecclestone was reportedly also in Sochi to sign the contract.

“In order to organise the work properly, we should create a management company here, in our country.  It should consist of private national companies,” Putin added.

The report said some of Russia’s biggest companies, including the state enterprise Rostekhnologii, mobile phone operator Megafon, oil company Lukoil and aluminum giant Rusal will invest in the circuit that could cost $200 million.

Nikolai Fomenko, boss of Marussia, said last month that he planned to bring the Russian sports car maker into F1 in 2012.  The company already sponsors the Virgin team.

“The signing of the agreement to stage a grand prix in Sochi will help put a Russian team in F1,” said Igor Yermilin, an official of the Russian Motor Racing Federation.

One of Jacques Villeneuve’s potential team investors is reportedly the son of the Libyan leader Colonel Gaddafi.

37-year-old Al-Saadi al-Gaddafi, known as a businessman and professional football player, is backing Villeneuve and Italian racing team Durango’s bid for the 13th place on the 2011 grid, according to Italiaracing.

It is also claimed that Russian and Italian businessmen are investing in the F1 foray, while Luca Filippi and Davide Valsecci are in the running to be the 1997 world champion’s teammate.

Gaddafi Jr is closely linked with the state-owned Libyan oil refining company Tamoil, former shirt sponsor of the Italian football club Juventus.

Italiaracing.net also said that if hopeful outfit Stefan GP wins the 13th team entry, the Serbian car would be powered by a Cosworth engine.

According to reports in the financial media, F1 engine supplier Cosworth could soon be floated on the stock exchange.

The reports estimated the value of the flotation at about (US) $360 million, following the famous British marque’s return to F1 with Williams and all three of the new teams.

Main investors Gerald Forsythe and Kevin Kalkhoven, who bought Cosworth from Ford in 2004, are reportedly considering the move as profits are expected to surge from $2m in 2008 to more than $70m this year.

The reports said auditor Deloitte may have been hired for the initial public offering, and a source admitted that business has picked up dramatically since the company laid off 200 staff when it dropped out of F1 at the end of 2006.

The Northampton Chronicle quoted a spokesman as saying on Tuesday: “As with any company that enjoys a particularly successful period, there is speculation that they will float. Those things go hand in hand.”
(GMM)

Bernie Ecclestone added more fuel to the fire when he made statements regarding the possibility that USF1 and Campos Meta 1 get a place in the grid of the first race at Bahrain. The F1 boss went even further by suggesting the both teams will miss the three first races of the season.
Ecclestone himself revealed there is a clause in the Concord Agreement which allows the teams to be absent at three races during the season. Even though most of the teams will not make use of it –due to the sponsorship contracts-, this could offer an extra period to Campos and USF1 to prepare for their debut in the Formula One.
“I think we won’t be seeing Campos nor the Americans, who are going to request to be absent to three races,” declared Ecclestone to Express. “According to the Concord Agreement the teams are authorized to be absent from three races.”
Both teams have insisted several times that they will run the first race of the season, even though Campos has admitted he is still looking for investors to pay the debts he has with the Dallara chassis manufacturer. On the other hand, the USF1 is ready for his final crash tests, and a number of reports suggest that the chassis is in a very advanced phase.
However, the Serbian, Stefan, who is developing the Toyota’s team F1 2010, is ready to intervene if necessary, suggested Ecclestone, saying that Stefan GP has gotten enough funds to be in conditions to participate in the races. “They have the Serbian government money. I have talked with the Prime Minister.” declared Ecclestone.
Formula One ex-pilots, Schumacher, Kazuki Nakajima and Jacques Villeneuve have been associated with the new team, that will make tests at the Algarve Portimao Race Circuit in Portugal, at the end of the month.

One question almost every investor asks at some point is whether it is possible to achieve above market returns by selecting a diversified group of stocks according to some formula, rather than having to evaluate each stock from every angle.

There are obvious advantages to such a formulaic approach. For the individual, the amount of time and effort spent caring for his investments would be reduced, leaving more time for him to spend on more enjoyable and fulfilling tasks. For the institution, large sums of money could be deployed without having to rely upon the investing acumen of a single talented stock picker. Many of the proposed systems also offer the advantage of matching the inflow of investable funds with investment opportunities. An investor who follows no formula, and evaluates each stock from every angle, may often find himself holding cash. Historically, this has been a problem for some excellent stock pickers. So, there are real advantages to favoring a formulaic approach to investing if such an approach would yield returns similar to the returns a complete stock by stock analysis would yield.

Many investment writers have proposed at least one such formulaic approach during their lifetime. The most promising formulaic approaches have been articulated by three men: Benjamin Graham, David Dreman, and Joel Greenblatt. As each of these approaches appeals to logic and common sense, they are not unique to these three men. But, these are the three names with which these approaches are usually most closely associated; so, there is little need to draw upon sources beyond theirs.

Benjamin Graham wrote three books of consequence: “Security Analysis”, “The Intelligent Investor”, and “The Interpretation of Financial Statements”. Within each book, he hints at various workable approaches both in stocks and bonds; however, he is most explicit in his best known work, “The Intelligent Investor”. There, Graham discusses the purchase of shares for less than two – thirds of their net current asset value. The belief that this method would yield above market returns is supported on both empirical and logical grounds.

In fact, it currently enjoys far too much support to be practicable. Public companies rarely trade below their net current asset values. This is unlikely to change in the future. Buyout firms, unconventional money managers, and vulture investors now check such excessive bouts of public pessimism by taking large or controlling stakes in troubled companies. As a result, the investing public is less likely to indulge its pessimism as feverishly as it once did; for, many cheap stocks now have the silver lining of being takeover targets. As Graham’s net current asset value method is neither workable at present, nor is likely to prove workable in the future, we must set it aside.

David Dreman is known as a contrarian investor. In his case, it is an appropriate label, because of his keen interest in behavioral finance. However, in most cases the line separating the value investor from the contrarian investor is fuzzy at best. Dreman’s contrarian investing strategies are derived from three measures: price to earnings, price to cash flow, and price to book value. Of these measures, the price to earnings ratio is by far the most conspicuous. It is quoted nearly everywhere the share price is quoted. When inverted, the price to earnings ratio becomes the earnings yield. To put this another way, a stock’s earnings yield is “e” over “p”. Dreman describes the strategy of buying stocks trading at low prices relative to their earnings as the low P/E approach; but, he could have just as easily called it the high earnings yield approach.

Whatever you call it, this approach has proved effective in the past. A diversified group of low P/E stocks has usually outperformed both a diversified group of high P/E stocks and the market as a whole.

This fact suggests that investors have a very hard time quantifying the future prospects of most public companies. While they may be able to make correct qualitative comparisons between businesses, they have trouble assigning a price to these qualitative differences. This does not come as a surprise to anyone with much knowledge of human judgment (and misjudgment). I am sure there is some technical term for this deficiency, but I know it only as “checklist syndrome”. Within any mental model, one must both describe the variables and assign weights to these variables. Humans tend to have little difficulty describing the variables – that is, creating the checklist. However, they rarely have any clue as to the weight that ought to be given to each variable.

This is why you will sometimes hear analysts say something like: the factor that tipped the balance in favor of online sales this holiday season was high gas prices (yes, this is an actual paraphrase; but, I won’t attribute it, because publicly attaching such an inane argument to anyone’s name is just cruel). It is true that avoiding paying high prices at the pump is a possible motivating factor in a shopper’s decision to make online Christmas purchases. However, it is an immaterial factor. It is a mere pebble on the scales. This is the same kind of thinking that places far too much value on a stock’s future earnings growth and far too little value on a stock’s current earnings.

The other two contrarian methods: the low price to cash flow approach and the low price to book value approach work for the same reasons. They exploit the natural human tendency to see a false equality in the factors, and to run down a checklist. For instance, a stock that has a triple digit price to cash flow ratio, but is in all other respects an extraordinary business, will be judged favorably by a checklist approach. However, if great weight is assigned to present cash flows relative to the stock price, the stock will be judged unfavorably. This also illustrates the second strength of the three contrarian methods.

They heavily weight the known factors. Of course, they do not heavily weight all known factors. They only consider three easily quantifiable known factors. An excellent brand, a growing industry, a superb management team, etc. may also be known factors. However, they are not precisely quantifiable. I would argue that while these factors may not be quantifiable they are calculable; that is to say, while no exact value may be assigned to them, they are useful data that ought to be considered when evaluating an investment.

There is the possibility of a middle ground here. These three contrarian methods may be used as a screen. Then, the investor may apply his own active judgment to winnow the qualifying stocks down to a final portfolio. Personally, I do not believe this is an acceptable compromise. These three methods do not adequately model the diversity of great investments. Therefore, they must either exclude some of the best stocks or include too many of the worst stocks. It is wise to place great weight upon each of these measures; however, it is foolish disqualify any stock because of a single criterion (which is exactly what such a screen does).

Finally, there is Joel Greenblatt’s “magic formula”. This is the most interesting formulaic approach to investing, both because it does not subject stocks to any true/false tests and because it is a composite of the two most important readily quantifiable measures a stock has: earnings yield and return on capital. As you will recall, earnings yield is simply the inverse of the P/E ratio; so, a stock with a high earnings yield is simply a low P/E stock. Return on capital may be thought of as the number of pennies earned for each dollar invested in the business. The exact formula that Greenblatt uses is described in “The Little Book That Beats the Market”. However, the formula used is rather unimportant. Over large groups of stocks (which is what Greenblatt suggests the magic formula be used on) any differences between the various return on capital formulae will not have much affect on the performance of the portfolios constructed.

Greenblatt claims his magic formula may be used in two different ways: as an automated portfolio generation tool or as a screen. For an investor like you (that is, one with sufficient curiosity and commitment to frequent a site such as this) the latter use is the more appropriate one. The magic formula will serve you well as a screen. I would argue, however, that you needn’t limit yourself to stocks screened by the magic formula, if you have full confidence in your judgment regarding some other stock.

These four formulaic approaches (the three from Dreman and the one from Greenblatt) will likely yield returns greater than or equal to the returns you would obtain from an index fund. Therefore, you would do better to invest in your own basket of qualifying stocks than in the prefabricated market basket. If you want to be a passive investor, or believe yourself incapable of being an active investor, these formulaic approaches are your best bet.

In fact, if I were approached by an institution making long – term investments and using only a very small percentage of the fund for operating expenses, I would recommend an automated process derived from these four approaches. I would also recommend that 100% of the fund’s investable assets be put into equities, but that is a discussion for another day (in fact, it’s a discussion for Tuesday; my next podcast is devoted to the dangers of diversification). If, however, you believe you have what it takes to be an active investor, and that is truly what you wish to be, then, I would suggest you do not use these approaches for anything more than helping you generate some useful ideas.

If you choose this path, you need to be clear about what being an active investor entails. Read this next part very carefully (it is correct even though it may not appear to be): I have never found a screen that generates more than one buy order per hundred stocks returned. Even after I have narrowed the list of possible stocks down by a cursory review of the industry and the business itself, I have never found a method that can consistently generate more than one buy order per twenty – five annual reports read.

Here, I am citing my best past experiences. In my experience, most screens result in less than one buy order per three hundred stocks returned, and I usually read more like fifty to a hundred annual reports per buy order at a minimum. You may choose to invest in far more stocks than I do. Perhaps instead of limiting yourself to your five to twelve best ideas as I do, you might want to put money into your best twenty – five to thirty ideas. Do the math, and you’ll see that is still quite a bit of homework.

That’s why remaining a passive investor is the best bet for most people. The time and effort demanded of the active investor is simply too taxing. They have more important, more enjoyable things to do. If that’s true for you, the four formulaic approaches outlined above should guide you to above market returns.