Here’s Why SaltLight Capital is Holding Karooooo Ltd. (KARO)

SaltLight Capital, an investment management company, released its “SaltLight SNN Worldwide Flexible Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. This quarter’s activity was comparatively low for the fund while the portfolio firms are performing in line with expectations and, in several circumstances, much better than expected. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.

SaltLight Capital highlighted stocks like Karooooo Ltd. (NASDAQ:KARO) in the third quarter 2023 investor letter. Headquartered in Singapore, Karooooo Ltd. (NASDAQ:KARO) is a mobility software-as-a-service (SaaS) platform for connected vehicles. On November 17, 2023, Karooooo Ltd. (NASDAQ:KARO) stock closed at $24.94 per share. One-month return of Karooooo Ltd. (NASDAQ:KARO) was 2.32%, and its shares gained 5.06% of their value over the last 52 weeks. Karooooo Ltd. (NASDAQ:KARO) has a market capitalization of $771.92 million.

SaltLight Capital made the following comment about Karooooo Ltd. (NASDAQ:KARO) in its Q3 2023 investor letter:

“Karooooo Ltd. (NASDAQ:KARO), our highly cashflow-generative telematics SaaS business is not one of the ‘Distressed Five’ but recent events offer an opportunity to draw a thread to one of the Five – Transaction Capital.

During the quarter, Karooooo decided to discontinue its second-hand vehicle business Carzuka.

To be honest, we harboured some reservations from the outset that Carzuka would acquire meaningful market share without investing a significant amount of shareholder capital. Our insights are mostly gleaned from our investment in the largest competitor – WeBuyCars (owned by Transaction Capital).

In the vehicle retailing market, margins are notoriously slim. The pivotal drivers are inventory turns and the management of working capital. Scale is a decisive advantage, and a smaller entrant like Carzuka is inherently disadvantaged when the product sold is a commodity (WeBuyCars: 12,000 bays vs Carzuka: 2,000 bays)…” (Click here to read the full capital)

Karooooo Ltd. (NASDAQ:KARO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held Karooooo Ltd. (NASDAQ:KARO) at the end of second quarter which was 4 in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2023 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.