We recently compiled a list of the 99% of Billionaire Abrams’ Portfolio is in These 11 Stocks. In this article, we are going to take a look at where Asbury Automotive Group, Inc. (NYSE:ABG) stands against the other stocks in David Abrams’ portfolio.
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).
A customer smiling delightedly after driving away in their new car from the automotive retail shop.
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.
Overall ABG ranks 3rd on our list of stocks in David Abrams’ portfolio. While we acknowledge the potential of ABG 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 ABG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.