Hedge Funds Are Overweight Car Dealership Stocks

#3 Lithia Motors Inc (NYSE:LAD)

 – Investors with long positions (as of March 31): 29

– Aggregate value of investors’ holdings (as of March 31): $452.44 million

Moving on, the number of hedge funds tracked by us with long positions in Lithia Motors Inc (NYSE:LAD) increased by four during the first quarter. However, the aggregate value of their holdings shrunk by 23.5% during the same period. Some of this decline in the value of holdings can be attributed to the 18% fall that Lithia Motors Inc (NYSE:LAD)’s stock suffered during the first quarter. Since reaching their lifetime high of $126.56 last year in November, shares of the automotive franchise operator have been on a downward journey, losing over 30% of their value so far in 2016. Nevertheless, most analysts feel that this decline in the stock is overdone and has made it considerably cheap at current levels. For its fiscal 2016 first quarter, analysts expect the company to report EPS of $1.94 on revenue of $2.18 billion, compared to EPS of $1.86 on revenue of $2.00 billion it delivered in the same quarter last year.  Amy Minella‘s Cardinal Capital increased its stake in Lithia Motors Inc by 11% to 168,879 shares during the first quarter.

#2 AutoNation, Inc. (NYSE:AN)

 – Investors with long positions (as of March 31): 32

– Aggregate value of investors’ holdings (as of March 31): $1.11 billion

AutoNation, Inc. (NYSE:AN) saw a notable decrease in its popularity among hedge funds during the first quarter, with its ownership among funds covered by us coming down by four and the aggregate value of their holdings in it falling by $278 million. Funds that sold their entire stake in the company during that period included billionaire Jim Simons‘ Renaissance Technologies. AutoNation, Inc. (NYSE:AN) lost more than one-fourth of its market capitalization amid a slump in the broader market in January and hasn’t been able to recover from that decline, so far as it trades with a year-to-date loss of 21%. Most analysts who cover the stock also don’t expect it to rebound anytime soon. The stock currently sports an average rating of ‘Hold’ and an average price target of $56.30 from the 16 prominent analysts and research firms on the Street who cover it.

#1 KAR Auction Services Inc (NYSE:KAR)

 – Investors with long positions (as of March 31): 36

– Aggregate value of investors’ holdings (as of March 31): $1.15 billion

Though KAR Auction Services Inc (NYSE:KAR)’s stock has performed well in the second quarter and is trading close to its lifetime high currently, it seems a lot of hedge funds were not expecting this as the number of hedge funds tracked by us long the stock fell by six and the aggregate value of their holdings in it fell by $65 million during the first quarter. Nevertheless, there were also a few hedge funds that became bullish on the stock during that period and initiated a stake in it, including Jacob Gottlieb’s Visium Asset Management, which purchased 252,849 shares. Despite trading very close to its lifetime high, KAR Auction Services Inc (NYSE:KAR)’s stock sports a respectable annual dividend of 2.84% currently. For its fiscal 2016 first quarter, the company reported EPS of $0.55 on revenue of $745 million, soundly beating analysts’ estimates of EPS of $0.50 on revenue of $695.79 million.

Disclosure: None