99% of Billionaire Abrams’ Portfolio is in These 11 Stocks

1. Loar Holdings Inc. (NYSE:LOAR)

Abrams Capital Management’s Q3 2024 Investment: $2.87 Billion

Percentage of Abrams Capital Management’s Portfolio: 46.03%

Number of Hedge Fund Holders:18

Loar Holdings Inc. (NYSE:LOAR) designs and makes aerospace and defense parts for aircraft. The stock has risen 93.32% year to date because the company has become a major player in the defense sector, focusing on avionics and electronics. It is also a key player in the commercial aircraft aftermarket, benefiting from the aerospace industry’s recovery and growth.

On November 13, Loar Holdings Inc. (NYSE:LOAR) reported record third-quarter 2024 results, with net sales of $103.5 million (up 25% year-over-year), net income of $8.7 million (up $5.8 million), diluted earnings per share of $0.09, and adjusted EBITDA of $38.1 million (up 31.8%). The net income margin improved to 8.4% from 3.4%, and the adjusted EBITDA margin increased to 36.8% from 34.9%, with adjusted earnings per share of $0.15.

Loar Holdings Inc. (NYSE:LOAR) has been expanding through strategic acquisitions. It recently bought Applied Avionics, Inc. for $385 million in August. Applied Avionics makes avionics interface solutions. This purchase is expected to add $40 million in revenue and about $20 million in adjusted EBITDA each year, with high margins of 50%. This should quickly boost Loar’s earnings.

According to the Insider Monkey database, 18 hedge funds held Loar Holdings Inc. (NYSE: LOAR) at the end of the third quarter, down from 24 in the previous quarter.

Here is what Baron Small Cap Fund stated about Loar Holdings Inc. (NYSE:LOAR) in its Q3 2024 investor letter:

“Finally, we sold Loar Holdings Inc. (NYSE:LOAR) following the stocks over 150% appreciation from its IPO price of $28 in April. Trading at 45 times 2024 EBITDA and 35 times 2025 EBITDA, we believe that a material portion of future gains have been pulled forward even with the assumption of a significant amount of M&A and organic growth estimated in coming years.”

While we acknowledge the potential of LOAR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LOAR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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