In this article, we will look at the 99% of billionaire Abrams’ portfolio in these 11 stocks.
Founded in 1999 by David Abrams, Abrams Capital Management is an investment fund that strives to generate value by leveraging opportunistic and value-oriented investment strategies. Likewise, its portfolio is well-skewed to navigate any challenging macro environment, as it mainly focuses on value investments.
In addition, Abrams Capital Management’s portfolio focuses on diversifying its holdings across various asset classes. Stocks, debt, and distressed securities are some of its top asset classes. Diversification and value investments are some of the strategies that have allowed Abrams to perform better than other hedge fund managers, based on an annualized net return of 15% over the past 15 years.
Abrams Capital Management is primarily invested in the Services sector in the equity markets, which accounts for 25% of its holdings, with Technology stocks accounting for about 11,% followed in third by Basic Materials stocks. The strategic distribution affirms the hedge fund’s focus on sectors with higher prospects for value growth that align with long-term investment philosophy.
In the third quarter, Abrams made significant changes, trimming stakes in some holdings while increasing in others. The hedge fund made no new purchases or sales, reduced holdings in 3 stocks, and did not add to any existing positions. The top 10 holdings constitute 97.75% of the portfolio. The investments are concentrated in seven key sectors. The changes reflect the calculated approach in response to changing macroeconomics.
Our Methodology
To compile the list of billionaire Abrams’ portfolio we scanned Abrams Capital Management’s third quarter portfolio, focusing on the biggest holdings based on investment size. Upon analyzing the stocks, focusing on why they stand out, we ranked them in ascending order based on Abrams Capital Management’s equity stake.
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David Abrams of Abrams Capital Management
99% of Billionaire Abrams’ Portfolio is in These 11 Stocks
11. Camping World Holdings, Inc. (NYSE:CWH)
Abrams Capital Management’s Q3 2024 Investment: $75.30 Million
Percentage of Abrams Capital Management’s Portfolio: 1.2%
Number of Hedge Fund Holders: 21
Camping World Holdings, Inc. (NYSE:CWH) sells RVs and related products. Abrams Capital Management owns $75.30 million worth of its stock, which is 1.2% of their portfolio. The company has faced challenges in its RV rental business due to high interest rates. Despite this, it remains a market leader with nearly 11% of the new and used RV market, thanks to strong sales and strategic growth.
Camping World Holdings, Inc. (NYSE:CWH) had mixed results in the third quarter on October 28, 2024. Revenue dropped slightly by 0.3% to $1.7 billion, but this was better than the $1.64 billion analysts expected. Sales of new and used items in the same stores grew for the first time in 10 quarters. However, net income fell by 73.9% to $8.1 million because gross profit decreased by $24.6 million.
Even as Camping World Holdings, Inc. (NYSE:CWH) faces challenging market conditions, it expects growth in the RV market. It’s pushing for strategic acquisitions to unlock new growth opportunities and strengthen its revenue base.
On November 15, Camping World Holdings, Inc. agreed to buy seven dealerships from Lazydays Holdings, Inc. in Arizona, Tennessee, Wisconsin, Iowa, Indiana, Oregon, and Washington. The deal is expected to cost between $10 million and $20 million after financing. This purchase fits Camping World’s goals and helps them grow their market share.
10. Tempur Sealy International, Inc. (NYSE:TPX)
Abrams Capital Management’s Q3 2024 Investment: $196.56 Million
Percentage of Abrams Capital Management’s Portfolio: 3.15%
Number of Hedge Fund Holders: 51
Tempur Sealy International, Inc. (NYSE:TPX) designs, manufactures, distributes, and retails bedding products. The company is outperforming global industry trends despite a slow bedding market. The stock is already up by 10.27% for the year as it experiences robust sales growth, particularly in China and the UK.
Tempur Sealy International, Inc. (NYSE:TPX) delivered solid third-quarter results on November 7, 2024. The better than expected results came as the company navigated a challenging market hurt by reduced consumer purchasing power. Strategic product launches, efficient operations, and a focus on international growth were the catalysts behind a 2% increase in sales to $1.3 billion. It also delivered better than expected earnings per share of $0.82 against $0.81 expected. Additionally, the company posted the strongest cash flow growth since 2021, of $240 million.
In May 2023, Tempur Sealy International, Inc. (NYSE:TPX) agreed to buy Mattress Firm for $4 billion. The FTC blocked the deal in July, fearing it would reduce competition and raise prices. Tempur Sealy plans to fight this in court and expects the deal to close in late 2024 or early 2025. They agreed to sell some Mattress Firm locations and their Sleep Outfitters subsidiary. If the deal goes through, Tempur Sealy will have over 2,800 stores worldwide, with most North American sales from Mattress Firm.
Here is what The London Company Small Cap Strategy stated about Tempur Sealy International, Inc. (NYSE:TPX) in its Q2 2024 investor letter:
“Tempur Sealy International, Inc. (NYSE:TPX) – TPX underperformed in 2Q as a weak bedding market weighed on recent results. Despite the challenging backdrop, TPX’s strong pricing power and significant share gains have helped dampen the negative volume impact. Recent investments in distribution, advertising, and product innovation lay the groundwork for future growth, while visibility into margin recovery is improving on the back of lower input costs and operational efficiencies. The planned acquisition of Mattress Firm has the potential to be materially accretive and strengthen TPX’s overall competitive position. However, the market appears to be pricing in skepticism that the deal will ultimately receive regulatory approval, Robust free cash flow generation, strong brand equity, and solid management execution support our investment thesis.”
