Investment management company Saga Partners recently released its second half 2022 investor letter. A copy of the same can be downloaded here. In the second half of 2022, the fund declined 40.0% net of fees compared to a 7.6% (including dividends) increase for the S&P 500 Index. The annualized return of the fund since inception is -9.3% net of fees compared to the S&P 500’s 11.4%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Saga Partners highlighted stocks like Carvana Co. (NYSE:CVNA) in its second half 2022 investor letter. Headquartered in Tempe, Arizona, Carvana Co. (NYSE:CVNA) is an e-commerce platform for buying and selling used cars. On February 17, 2023, Carvana Co. (NYSE:CVNA) stock closed at $11.37 per share. One-month return of Carvana Co. (NYSE:CVNA) was 58.36%, and its shares lost 91.00% of their value over the last 52 weeks. Carvana Co. (NYSE:CVNA) has a market capitalization of $2.019 billion.
Saga Partners made the following comment about Carvana Co. (NYSE:CVNA) in its second half 2022 investor letter:
“I have discussed Carvana Co. (NYSE:CVNA) several times since we first purchased it in 2019 but want to provide an update given the stock’s decline and negative headlines. Historically, Carvana has grown gross profits at a faster rate than operating costs. In 2021, Carvana grew retail unit volumes 74% to over 400,000 cars to become the second largest used car dealer after CarMax. Carvana reached $1.9 billion in gross profits, EBITDA breakeven, and expectations entering 2022 were for continued unit volume growth and scale operating costs.
Similar to Redfin, Carvana has been impacted by pretty extreme industry disruptions/volatility. Supply chain bottlenecks restricted new car production and caused prices to rise. When combined with higher interest rates, car affordability declined and used car volumes crashed
Carvana plans and hires for expected capacity 6-12 months into the future. Entering 2022 the Company expected to grow unit volumes in the ~30% range year-over-year and therefore faced a cost structure far too high for the retail unit volumes experienced. Since demand has come in below expectations, management is now pursuing cost cuts to get back to EBITDA breakeven…” (Click here to read the full text)
Photo by Nima Sarram on Unsplash
Carvana Co. (NYSE:CVNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the third quarter, which was 47 in the previous quarter.
We discussed Carvana Co. (NYSE:CVNA) in another article and shared ClearBridge Mid Cap Growth Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
- 15 Most Profitable Small-Cap Stocks
- 12 Most Promising Tech Stocks To Buy
- 10 High Growth AI Stocks To Buy
Disclosure: None. This article is originally published at Insider Monkey.
