In this article, we will be discussing the 5 best stocks to buy according to billionaire Daniel Sundheim. If you want to read our detailed analysis of Sundheim’s history, and hedge fund performance, go directly to the 10 Bests Stocks to Buy According to Billionaire Daniel Sundheim.
5. Carvana Co. (NYSE: CVNA)
Sundheim’s Stake Value: $524,623,000
Percentage of Daniel Sundheim’s 13F Portfolio: 3.88%
Number of Hedge Fund Holders: 64
Carvana Co. (NYSE: CVNA) is an online used car retailer. The company was founded in 2012 and is ranked fifth on the list of 10 best stocks to buy according to billionaire Daniel Sundheim. Carvana shares have returned 90.89% to investors over the past 12 months.
On August 5, Carvana Co. (NYSE: CVNA) declared earnings for the second quarter of 2021. It reported earnings per share of $0.27, beating the estimates by $0.63. The revenue for the first three months of 2021 was $3.34 billion, up 198.2% YoY, beating the estimates by $860 million. The company also declared a gross profit of $552 million, up 268%. On August 5, Cowen analyst John Blackledge raised the price target on Carvana to $366 from $336 and maintained an “Outperform” rating on the shares.
On June 30, the company announced that it is expanding its presence in Kansas and will now offer as-soon-as-next-day touchless home delivery to residents of the Wichita area. Customers may search over 30,000 used cars for sale, apply for auto financing, use the car loan calculator, buy, trade-in, and arrange next-day delivery. D1 Capital Partners owns 2 million shares in Carvana Co. (NYSE: CVNA) worth over $524 million, representing 3.88% of their portfolio. Hedge fund sentiment increased for Carvana in the first quarter of 2021. Insider Monkey’s data shows that 64 elite hedge funds held stakes in the company at the end of the first quarter, up from 63 funds a quarter earlier.
Steel City Capital LP, in its first-quarter 2021 investor letter, mentioned Carvana Co. (NYSE: CVNA). Here is what the fund said:
“Carvana’s (CVNA) 4Q’20 results weren’t particularly great. EBITDA was negative ($70) million, a stark turnaround on a sequential basis from a first-ever EBITDA profit of $21 million in 3Q’20. The culprit was a steep drop off in retail unit GPU ($1,265 vs. $1,857) and wholesale unit GPU ($358 vs. $1,113) as some of the COVID-driven aberrations in the used car market began to abate.
The company’s presentation of EBITDA (calculated “bottom up”) is dubious, as it commingles non-operating items including mark-to-market changes in its retained securitization portfolio. With the exception of 1Q’20, when ABS markets were going haywire, this line item provided a tailwind throughout 2020, including a gain of $5 million in 4Q’20. Also on the non-operating self-help front, management released a reserve for vehicle service contract cancellations in 4Q’20, adding another $7 million to EBITDA, and boosting “Other” GPU by $96.
Putting it all together, I put operating EBITDA closer to negative ($82) million vs. the $70 million printed by the company. This is a larger loss than 4Q’19 (calculated on a similar operating basis) despite the company selling 43% more retail units y/y!…” (Click here to see the full text)
