Black Bear Value Partners, an investment management firm, published its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned +0.8% in March and -1.3% YTD and the S&P 500 returned -5.7% in March and -4.3% YTD. HFRI Value Index returned -2.0% in March and -0.5% YTD. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first quarter 2025 investor letter, Black Bear Value Fund emphasized stocks such as Asbury Automotive Group, Inc. (NYSE:ABG). Headquartered in Duluth, Georgia, Asbury Automotive Group, Inc. (NYSE:ABG) is an automotive retailer. The one-month return of Asbury Automotive Group, Inc. (NYSE:ABG) was -13.24%, and its shares lost 4.18% of their value over the last 52 weeks. On March 12, 2025, Asbury Automotive Group, Inc. (NYSE:ABG) stock closed at $210.85 per share with a market capitalization of $4.145 billion.
Black Bear Value Fund stated the following regarding Asbury Automotive Group, Inc. (NYSE:ABG) in its Q1 2025 investor letter:
“Asbury Automotive Group, Inc. (NYSE:ABG) operates auto dealerships across the United States. The strength of the model comes from the back of the house in parts and services where more than 50% of the profits come from.
Tariffs will increase the cost of an automobile, reducing the affordability for both new and used cars (holding all else equal). Some of this will be mitigated by a highly variable component to ABG’s wage expense. Some damage may also be mitigated by increased activity in the Parts & Service division. Most dealers currently have 1-2 months of used inventory and 2-3 months of new inventory on their lots. The impact of tariffs could take some time to be felt and its uncertain if there will be tax credits/interest deductibility to lessen the pain on American consumers.
ABG should be able to earn $20-$30 in free-cash flow per share in a “normal” year. I have reduced some of my estimates given the uncertain nature of the environment. At quarter-end pricing that implies a 9-14% annual yield.”
A customer smiling delightedly after driving away in their new car from the automotive retail shop.
Asbury Automotive Group, Inc. (NYSE:ABG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Asbury Automotive Group, Inc. (NYSE:ABG) at the end of the fourth quarter which was 30 in the previous quarter. In the fourth quarter of 2024, Asbury Automotive Group, Inc. (NYSE:ABG) generated $4.5 billion in revenues, up 18% year-over-year. While we acknowledge the potential of Asbury Automotive Group, Inc. (NYSE:ABG) 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.
We covered Asbury Automotive Group, Inc. (NYSE:ABG) in another article, where we shared Artisan Mid Cap Value Fund’s views on the company in the previous quarter. In the previous quarter investor letter Black Bear Value Fund discussed auto dealers transitioning to an omni-channel model to reduce costs and improve efficiency, despite the market undervaluing these gains. In addition, please check out our hedge fund investor letters Q1 2025 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.