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.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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.”
9. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Abrams Capital Management’s Q3 2024 Investment: $212.29 Million
Percentage of Abrams Capital Management’s Portfolio: 3.4%
Number of Hedge Fund Holders: 42
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is an advisory broking and solutions company. It specializes in delivering solutions for managing risks, optimizing benefits and expanding capabilities. The stock is up by more than 31% for the year, emerging as one of the top-performing stocks in Abrams Capital Management’s portfolio.
Willis Towers Watson (NASDAQ: WTW) has expanded its product range and reach in countries like Italy, Canada, the UK, and France through strategic acquisitions. This growth boosts cash flow, and WTW expects higher free cash flow margins in 2024. On November 20, WTW and Kayna announced a partnership with Vibrant to enhance supply chain security by combining Kayna’s technology with WTW’s insurance services.
Additionally, geographic diversification, solid customer retention levels, and a strong capital position are driving strong financial performance. Willis Towers Watson Public Limited Company (NASDAQ:WTW) delivered impressive results for the third quarter on October 31, 2024. Revenues in the quarter were up 5.7% to $2.29 billion, with earnings per share increasing to $2.93 from $2.24 a year ago.
8. U-Haul Holding Co (NYSE:UHALB)
Abrams Capital Management’s Q3 2024 Investment: $245.07 Million
Percentage of Abrams Capital Management’s Portfolio: 3.93%
Number of Hedge Fund Holders: 22
U-Haul Holding Co (NYSE:UHALB) operates as a do-it-yourself moving and storage entity for household and commercial goods. It primarily rents trucks, trailers, portable moving and storage units, specialty rental items, and self-storage spaces to household movers. The stock is down by about 4% for the year on the back of disappointing financial results.
The underperformance comes from investors reacting to deteriorating macroeconomics hurting U-Haul Holding Co (NYSE:UHALB)’s core business. High interest rates have led to low consumer purchasing power resulting in reduced demand for the company’s storage and moving services.
On November 6, 2024, U-Haul Holding Co (NYSE:UHALB) reported disappointing second-quarter results. Their net earnings dropped to $186.8 million from $273.5 million in the previous year. Additionally, their US store segment is not growing as fast as they are adding new units.
Despite these challenges, U-Haul Holding Co (NYSE:UHALB) is planning for the future. The company has already acquired five former KO Storage facilities in Minnesota’s Cass as it looks to tap into new markets.
7. Energy Transfer LP (NYSE:ET)
Abrams Capital Management’s Q3 2024 Investment: $286.24 Million
Percentage of Abrams Capital Management’s Portfolio: 4.59%
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) owns and runs natural gas pipelines and storage facilities. It also sells natural gas to electric utilities, power plants, and local distributors. The stock has gone up by over 24% this year, even though the energy sector is struggling with oil prices falling below $75 a barrel.
Energy Transfer LP (NYSE:ET) has one of the largest energy networks in the U.S., with nearly 130,000 miles of pipelines in 44 states. Over the past 20 years, it has grown from a small pipeline operator to a major energy company. Its large natural gas pipeline network is ready to meet increasing electricity demand. The company’s various assets, including oil, NGL, and gas pipelines, help maintain strong earnings.
Energy Transfer LP (NYSE:ET) reported strong third-quarter results on November 6, 2024. Net income for shareholders was $1.18 billion, up from $466 million last year. Distributable Cash Flow for partners rose by $4 million to $1.99 billion. Their strong results come from a diverse asset portfolio, including the largest fractionation facility and a large pipeline network for transporting oil, gas, and NGLs.
Data centers, driven by AI expansion, are expected to account for 8% of U.S. power demand by 2030, up from 3% in 2022, according to a Goldman Sachs report. Energy Transfer LP (NYSE:ET)’s long-term prospects are good due to growing demand for power from AI and data centers. In November, Energy Transfer (ET.N) announced it received requests for connections to over 90 power plants and data centers, potentially adding 16 billion cubic feet per day of new natural gas demand.
6. Coupang, Inc. (NYSE:CPNG)
Abrams Capital Management’s Q3 2024 Investment: $319.59 Million
Percentage of Abrams Capital Management’s Portfolio: 5.13%
Number of Hedge Fund Holders: 56
Coupang, Inc. (NYSE:CPNG) is an internet retail giant that operates retail businesses through mobile applications in South Korea. It sells various products and services in the categories of home goods and décor products, apparel, and beauty products, among others. The stock is up by more than 50% for the year. The rally stems from solid financial results that have affirmed the company’s prospects in South Korea’s retail landscape.
Coupang, Inc. (NYSE:CPNG) reported strong third-quarter results on November 5, 2024. Revenue increased by 27% to $7.9 billion, and gross profit rose by 45% to $2.3 billion. This success was due to an 11% increase in active customers, who ordered nine times more than non-core members, boosting sales.
Although the company’s product commerce EBITDA margins fell by 5%, this was because of higher spending on technology. This investment shows Coupang, Inc. (NYSE:CPNG)’s focus on sustainable growth and improving customer experience. The company is financially strong with $1.8 billion in operating cash flow and $935 million in free cash flow.
Coupang, Inc. (NYSE:CPNG) was held by 56 hedge funds in Q3 2024, as per Insider Monkey’s database.
Baron Fifth Avenue Growth Fund stated the following regarding Coupang, Inc. (NYSE:CPNG) in its first quarter 2024 investor letter:
“We also added to our position in the Korean e-commerce platform, Coupang, Inc. (NYSE:CPNG), as the company continues to execute at a high level, reporting strong financial results, with accelerating revenue growth – revenues were up 20% year-over-year in constant currency in the fourth quarter, 29% excluding the impact from Coupang’s Fulfillment and Logistics accounting change, driven by growth in its number of customers count (up 16% year-over-year), growth of its loyalty Wow members (up 27% year-over-year) and growth in spending by existing cohorts (with every cohort, including those who have used the platform for a long time, growing at least 15% year-over-year), which suggests continued wallet share gains for the company. While Coupang continues to gain market share, its attractive unit economics are beginning to appear in results, with adjusted EBITDA margins of its commerce segment reaching 7.1% in the fourth quarter (up 190bps year-over-year). Coupang is utilizing the growing profits from commerce to invest in emerging offerings such as Fulfillment and Logistics by Coupang (FLC), expansion into Taiwan (with revenues up 2 times in the last six months) and Coupang Eats, its food delivery network, which saw order volume increase by 2 times as well in the last nine months. In the last week or so, Coupang also announced a material 58% Wow membership price hike, which should flow through nicely to the bottom line, sending the stock higher by close to 20%.”
5. Alphabet Inc. (NASDAQ:GOOGL)
Abrams Capital Management’s Q3 2024 Investment: $342.84 Million
Percentage of Abrams Capital Management’s Portfolio: 5.5%
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is Abrams Capital Management’s largest holding in the communication services sector. The company generates most of its revenue from Google’s search engine advertising network and YouTube. Similarly, the stock is up by about 19.24% year to date as investors react to the company’s robust digital advertising business.
Most of Alphabet Inc.’s (NASDAQ:GOOGL) revenue comes from advertising. This segment benefits from increased ad spending in a strong US and global economy. Besides advertising, Alphabet’s revenue is also growing due to more people using cloud computing solutions.
Alphabet Inc. (NASDAQ:GOOGL) is using artificial intelligence (AI) to improve its search business and boost demand for its cloud services. Alphabet has spent $49.3 billion on expanding its AI infrastructure, including servers and data centers.
These investments helped Alphabet achieve strong Q3 financial results on October 29, 2024. Revenue increased by 15% compared to last year, and earnings per share (EPS) rose by 37% from $1.55 to $2.12. The operating margin also grew from 28% last year to 32% this year, contributing significantly to this gain.
4. Meta Platforms, Inc. (NASDAQ:META)
Abrams Capital Management’s Q3 2024 Investment: $355.23 Million
Percentage of Abrams Capital Management’s Portfolio: 5.7%
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) is Abrams Capital Management’s largest holding in the internet content and information segment. The company, which owns some of the biggest networking apps, offers exposure to the multibillion-dollar digital advertising business from which it generates a significant chunk of its revenues.
Meta Platforms, Inc. (NASDAQ:META) benefits a great deal from owning four of the seven most widely used social media platforms worldwide. Facebook, WhatsApp, Instagram and Messenger attract more than 3.2 billion unique visitors daily, each with more than a billion monthly active users. Consequently, the company has become the second-largest ad tech company in the world, behind Alphabet’s Google.
Meta Platforms, Inc. (NASDAQ:META) is using AI to boost engagement and reduce ad costs. AI recommendations have increased time spent on Facebook and Instagram by 8% and 6% this year. On November 20, Meta announced new Messenger features, including AI backgrounds for video calls, HD video calls, noise suppression, and voice isolation. Over a billion people use Messenger monthly.
Meta Platforms, Inc. (NASDAQ:META) delivered impressive third-quarter results on October 30, 2024. The company reported $6.03 earnings per share and $40.5 billion in revenue for Q3 2024, exceeding analyst expectations of $5.22 earnings per share and $40.2 billion in revenue. The growth came as the company attracted more advertising budgets. Increased investment in artificial intelligence to enhance user experience in apps, and enhance engagement levels should allow the company to continue attracting more advertising campaigns.
According to Insider Monkey’s database, 235 hedge funds held Meta Platforms, Inc. (NASDAQ:META) at the end of the third quarter, up from 219 in the previous quarter.
Alger Spectra Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q3 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) operates the world’s largest social network, with over 3 billion monthly active users. The company generates more than 95% of its revenue from advertising, evenly split between North America and international markets. During the quarter, shares contributed to performance following the release of strong fiscal second quarter operating results, with revenues and earnings beating analyst estimates. Management also raised their fiscal 2024 revenue guidance, citing improved advertising monetization. CEO Mark Zuckerberg stated that AI has played a key role in these successes, as the company is leveraging AI to enhance targeting, measurement, ranking, and ad delivery. Higher user engagement, driven by video ranking, content recommendations, and single video views, has also supported growth. Additionally, the optimization of ad placements within videos and automation of ad campaigns are further boosting monetization.”
3. Asbury Automotive Group, Inc. (NYSE:ABG)
Abrams Capital Management’s Q3 2024 Investment: $503.08 Million
Percentage of Abrams Capital Management’s Portfolio: 8.07%
Number of Hedge Fund Holders: 30
Asbury Automotive Group, Inc. (NYSE:ABG) is one of the best-performing stocks in Abrams Capital Management’s portfolio, going by the 17.26% year-to-date gain. The outperformance comes from the company establishing itself as a leader in providing various automotive products and services. It provides new and used car parts, repair and maintenance services.
After a few quarters of rising inventories and interest rates, new cars in the U.S. are now more affordable than they have been in three years. Lower interest rates are expected to help even more. Despite some challenges, Asbury Automotive Group, Inc. (NYSE:ABG) is doing well in a better business environment.
On October 29, 2024, Asbury Automotive Group, Inc. (NYSE:ABG) reported strong third-quarter results with a 16% increase in revenue to $4.2 billion and adjusted earnings per share (EPS) of $6.35. However, Hurricane Helene and stop sale orders for some Toyota, Lexus, and BMW models hurt their profits, reducing EPS by about $0.39 to $0.43. While used car profits went up, new car profits went down. During the quarter, Asbury bought back 400,000 shares for $89 million, showing their commitment to returning value to shareholders. The company is well-positioned for future growth due to its focus on increasing profits and smart capital use.
At the end of the third quarter of 2024, 30 hedge funds held stakes in Asbury Automotive Group Inc. (NYSE:ABG), with a total investment value of $1.44 billion.
2. Lithia Motors, Inc. (NYSE:LAD)
Abrams Capital Management’s Q3 2024 Investment: $759.54 Million
Percentage of Abrams Capital Management’s Portfolio: 12.19%
Number of Hedge Fund Holders: 43
Lithia Motors, Inc. (NYSE:LAD) operates auto and truck dealerships that sell new and used vehicles and parts. It also conducts repair and maintenance services. The automotive dealership company has over 101,000 vehicles at 300 locations in the US, more than 1,000 vehicles at 15 locations in Canada, and over 4,000 vehicles at 151 locations in the UK. With more than 51 brands, it is considered one of the fastest-growing companies in the US.
Up by about 20.35% year to date, it is one of the best-performing stocks in Abrams Capital Management portfolio. Lithia Motors, Inc. (NYSE:LAD) delivered solid third-quarter results on October 23, 2024. In the quarter it leveraged its size and scale to seize new opportunities while focusing on operational efficiencies. Revenues in the quarter were up 11% year over year to $9.2 billion. Adjusted earnings per share totaled $8.21, beating consensus estimates of $7.59 a share.
Lithia Motors, Inc. (NYSE:LAD) has also embarked on an expansion drive with the acquisition of Sunrise Chevrolet Buick GMC and Sunrise Buick GMC. These purchases are expected to add $240 million in yearly revenue. The company’s earnings are also expected to grow by 51% in the next few years, showing its potential for long-term success.
As per the Insider Monkey’s database, 43 hedge fund portfolios held Lithia Motors, Inc. (NYSE:LAD) at the end of the third quarter which was 35 in the previous quarter.
Madison Investments Madison Mid Cap Fund stated the following regarding Lithia Motors, Inc. (NYSE:LAD) in its Q3 2024 investor letter:
“During the quarter we added three new holdings: Graco, Lithia Motors, Inc. (NYSE:LAD), and Asbury Automotive. We purchased shares in Lithia Motors and Asbury Automotive, two of the largest auto franchise dealer groups in the country, owning a diversified portfolio of dealerships ranging from Toyota to Ford to Mercedes. Investors tend to pay a lot of attention to the level of new car sales, but dealers actually earn more in profits from parts and service than they do from selling new cars, and this steady business provides a nice ballast throughout the economic cycle. In addition, we believe these businesses have a long runway to create value via consolidation of this fragmented industry, as the advantages of scale are increasing.”
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.
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