No. of Recommendations: 3
Cyberschreiber,
Thank you for this information and perspective. The failed battery business was completely new to me. I don’t like to assume management are incompetent, just because they were handed their positions from their father. But when I read about something like this battery - total failure and allowing a completely inferior watch like Rolex to utterly out manoeuvre Breguet, combined with a blatant intention to walk all over minority shareholders. Add to that the shocking financial performance in 2024 compared to peers, it is fair to say that partnering with this family is unlikely to end well.
Sure the valuation can easily present an opportunity to make money once the general global demand for watches turns, or if Swatch suddenly started running the high end brands like Breguet more like Rolex. But that doesn’t seem likely. Your personal story about attempting to acquire a high end competitor watch demonstrates how Breguet should be run.
I recently discovered that the resale value for an unworn Breguet Tradition, for example, is significantly less than the retail price from Breguet. A completely opposite dynamic that exists for certain Rolex or Patek Philippe. That tells me Breguet is not being marketed properly.
Unrelated to investing in Swatch, I can appreciate why serious horologists consider Breguet to be superior, to relative new comers, like Rolex. If I was going to buy a watch to pass down the generations, it would be a Breguet. The craftsmanship and history is the ultimate in watches. This is currently not appreciated by the general luxury watch market participant. But I would expect that to change eventually. I think investing in companies like Berkshire will work out better than investing in watches but I am tempted from a diversification and art perspective. Based on my one week of being an ‘expert’ on watches, Breguet is a truly incredible watch it seems.
As mentioned previously, I would buy some Swatch Group stock if a couple of things changed:
New management, not of the current pedigree (highly unlikely for a long time).
Clear signs of a recovery in demand, particularly in China (may be years away).
A fundamental change in how the high end watches are marketed (highly unlikely).
You mentioned in one of your posts, the earlier threat to Swiss watchmakers from Japanese watchmakers. That is a good reminder of how this is a difficult business. Since then the threat has come from smart watches. Another headwind has been the move to more casual dress since Covid making more modern watches more acceptable and traditional watches perhaps less appealing. Then there is the rise of manufacturing technology, another threat.
Yet despite all those headwinds, I still think there is place for Swiss craftsman and history. There is something magical and desirable that people want to pay up for. I can see the Chinese going wild for Breguet in the future, if the brand and supply was intelligently managed.
Apologies for commenting on something I know nothing about. It was intended only to selfishly learn something and in that regard it was a success. Thanks again for sharing your experience and knowledge.
Best wishes
