3. AMERCO (NASDAQ:UHAL)
Abrams Capital Management’s Stake Value: $252,456,000
Percentage of Abrams Capital Management’s 13F Portfolio: 5.89%
Number of Hedge Fund Holders: 29
PE Ratio as of June 17: 7.97
AMERCO (NASDAQ:UHAL) operates as a do-it-yourself moving and storage operator for household and commercial goods in the United States and Canada. At the close of Q1 2022, Abrams Capital Management’s stake in the company was valued at $252.45 million, and as of June 17, the stock has a trailing-twelve-month PE ratio of 5.89 which places it among the top 3 value stocks to buy according to David Abrams.
On May 25, AMERCO (NASDAQ:UHAL) announced earnings for the fourth quarter of fiscal year 2022. The company reported earnings per share of $4.42, missing expectations by $2.96. The company’s revenue for the quarter came in at $1.20 billion, up 13.06% year over year, but missed expectations by $37.86 million.
At the end of Q1 2022, 29 hedge funds held stakes in AMERCO (NASDAQ:UHAL) which were valued at $937.71 million. This is compared to 29 positions in the preceding quarter with stakes worth $964.95 million.
Third Avenue Management, an investment management firm, recently published its “Real Estate Value Fund” first-quarter 2022 investor letter, in which it mentioned AMERCO (NASDAQ:UHAL). Here is what the firm had to say:
“Held in the Fund since 2018, AMERCO is widely recognized as the leader in self-moving in North America through its U-Haul subsidiary where it has an unrivaled network with approximately 176,000 trucks, 126,000 trailers, and 46,000 towing devices available across more than 23,000 locations. What is not as widely recognized, in Fund Management’s opinion, is that the company’s forward thinking management team has also spent the last decade assembling one of the largest self-storage portfolios in North America-not only solidifying the “moat” around its core business but also creating substantial value in the process.
Due to these efforts, AMERCO owned and managed more than 73 million square feet of self-storage facilities at the end of the 2021, placing it as the third largest owner of such properties in the US. Notwithstanding, the company does not seem to get much (if any) recognition for this transformation. To wit, if one were to apply the implied price per square foot for AMERCO’s closest comparable on the self-storage side of the business (e.g., Life Storage), they would arrive at an implied value for its impossible-to-replicate self-moving business of basically $0- despite it generating more than $1.0 billion of operating profits per year more recently, implying $7-8 billion of value based upon comparables within the rental segment.
This disconnect does not seem to be lost on Chairman and CEO Edward Shoen (who owns 42.7% of the company’s stock along with beneficiaries). In fact, in response to a question about the price-to-value discrepancy during the company’s most recent quarterly conference call, he remarked that “it’s a question that is regularly discussed at the board level” and that “hopefully we’ll have some news for you before the year is out.” In the meantime, AMERCO is not only continuing to self-finance the expansion of its self-storage portfolio with more than 7 million square feet of projects in development, but the company is also expanding its “U-Box” offering as it gains further market share in the portable storage and moving segment.”
