Bretton Capital Management, an investment management company, released “Bretton Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The market is experiencing a period of high returns, with two consecutive years of around 25% returns and 15 years of mid-teens returns, prompting investors to be cautious. The average stock market return is around 9-10% per year, historically, based on corporate earnings growth and dividends and buybacks. The 20 companies the fund owns are well-positioned and expected to perform well. Against this backdrop, in the fourth quarter, the fund returned -0.98% compared to 2.41% return for the S&P 500. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, Bretton Fund emphasized stocks such as AutoZone, Inc. (NYSE:AZO). AutoZone, Inc. (NYSE:AZO) is a retailer of automotive replacement parts and accessories. The one-month return of AutoZone, Inc. (NYSE:AZO) was 7.13%, and its shares gained 26.79% of their value over the last 52 weeks. On February 14, 2025, AutoZone, Inc. (NYSE:AZO) stock closed at $3,458.55 per share with a market capitalization of $57.732 billion.
Bretton Fund stated the following regarding AutoZone, Inc. (NYSE:AZO) in its Q4 2024 investor letter:
“AutoZone, Inc. (NYSE:AZO) hits the Bretton Fund sweet spot in many ways: it appears to be a somewhat sleepy business, but it has excellent economics and shareholder-oriented management. That combination has led to wonderful returns. Since we first invested in it in 2015, the stock has returned 362%, more than 120% points over the S&P 500. Its return on invested capital—a key measure of profitability—is 50%, over three times the 15% average of the large companies. Selling aftermarket auto parts is a deceptively challenging business. The average part will sit on the shelf for an entire year, and AutoZone’s larger stores will stock over 100,000 unique items, a massive amount of slow-moving inventory to hold. It’s a complex business, and smaller, less-sophisticated stores have a tough time competing. Recently, the business has focused more on international expansion, and that’s been fruitful. Earnings per share increased 13%, and its stock returned 24%.”
A technician in a mechanic’s uniform replacing an A/C compressor, signifying the company’s automotive replacement parts business.
AutoZone, Inc. (NYSE:AZO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held AutoZone, Inc. (NYSE:AZO) at the end of the third quarter which was 45 in the previous quarter. AutoZone, Inc.’s (NYSE:AZO) total sales in the fiscal fourth quarter were over $6.2 billion and were up 9% year-over-year. While we acknowledge the potential of AutoZone, Inc. (NYSE:AZO) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article we discussed AutoZone, Inc. (NYSE:AZO) and shared the list of highest-priced stocks. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.