Giverny Capital, an investment management company, recently published its fourth-quarter investor letter in 2022. A copy of the same can be downloaded here. The model portfolio of the firm appreciated 8.49%, net of fees in the fourth quarter compared to a 7.56% return for the Standard & Poor’s 500 Index. For 2022, the fund delivered a -22.65% return compared to a -18.11% return for the Index. Oil and energy was the strongest sector in the year increased by 65%. In addition, you can check the top 5 holdings of the fund to see its best picks for 2022.
Giverny Capital highlighted stocks like Credit Acceptance Corporation (NASDAQ:CACC) in its Q4 2022 investor letter. Headquartered in Southfield, Michigan, Credit Acceptance Corporation (NASDAQ:CACC) a financing company that advances money to automobile dealers. On January 27, 2023, Credit Acceptance Corporation (NASDAQ:CACC) stock closed at $472.15 per share. One-month return of Credit Acceptance Corporation (NASDAQ:CACC) was -0.47%, and its shares lost 11.13% of their value over the last 52 weeks. Credit Acceptance Corporation (NASDAQ:CACC) has a market capitalization of $6.102 billion.
Giverny Capital made the following comment about Credit Acceptance Corporation (NASDAQ:CACC) in its Q4 2022 investor letter:
“Rounding our top 10 at year-end was Credit Acceptance Corporation (NASDAQ:CACC), the Michigan-based lender to distressed borrowers. Credit Acceptance dropped 31% in 2022, then fell even more early in January in response to a lawsuit filed by the federal Consumer Financial Protection Bureau and New York State alleging the company engages in deceptive and unfair lending practices to financially vulnerable consumers.
Credit Acceptance offers car dealers a way to extend credit to consumers who get rejected by every other potential lender. The loans are not marketed to consumers, but as a tool for car dealers to extend credit to a person who otherwise could not buy a car. The terms are, in fact, very tough for consumers. By my reading of the lawsuit, the core of New York’s argument is that Credit Acceptance misleads consumers with the structure of its loans. In particular, the face amount of most loans it makes to consumers is more than the amount of money Credit Acceptance actually extends to the car dealer.
A simple example: a borrower buys a car for $10,000, making a $1,000 down payment and a taking out a $9,000 loan from Credit Acceptance. In fact, Credit Acceptance may only extend $7,000 of cash to the dealer at closing. Arguably, the dealer sold the car for $8,000 and the possibility of $2,000 more if the loan gets repaid…” (Click here to read the full text)
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Credit Acceptance Corporation (NASDAQ:CACC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Credit Acceptance Corporation (NASDAQ:CACC) at the end of the third quarter which was 23 in the previous quarter.
We discussed Credit Acceptance Corporation (NASDAQ:CACC) in another article and shared Giverny Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2022 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.
