LRT Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A return of +30.47% was recorded by the LRT Economic Moat strategy year-to-date, putting its 24-month return to +4.34%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
LRT Capital Management, in its Q4 2021 investor letter, mentioned Asbury Automotive Group, Inc. (NYSE: ABG) and discussed its stance on the firm. Asbury Automotive Group, Inc. is a Duluth, Georgia-based automotive retail company with a $4.5 billion market capitalization. ABG delivered a 12.97% return since the beginning of the year, while its 12-month returns are up by 16.20%. The stock closed at $195.13 per share on March 03, 2022.
Here is what LRT Capital Management has to say about Asbury Automotive Group, Inc. in its Q4 2021 investor letter:
“Asbury Automotive Group is one of the largest automotive retailers in the United States. It operates 90 dealerships consisting of 112 franchises and 25 collision repair centers. The company’s stores offer new and used vehicles, parts and service, as well as finance and insurance (F&I) products. Franchise agreements controlled by automotive manufactures and state laws create an environment of tightly controlled market entry and restricted competition.
The dealership industry is highly fragmented with 93.5% of dealers having only between 1-5 locations according to data from 2020. In fact, dealers with over 50 locations account for only 0.1% of the industry – a testament to the huge opportunity for consolidation that lies ahead. Industry dynamics, including the rising complexity of automobiles and the need for omnichannel distribution are favoring better capitalized and larger dealer groups. We believe Asbury Automotive Group has several distinct advantages, particularly its highly profitable parts and service business, its overexposure to the luxury vehicle business, which carriers the best margins, and its Clicklane omnichannel strategy. Asbury’s management has also been acting in the best interests of its shareholders by allocating capital towards acquiring dealerships to aggressively expand its business, and occasionally repurchasing stock when attractive acquisitions targets could not be found.
ABG is not a fast-growing SaaS business, but when paying a valuation of ¼ of the overall stock market, one does not need to make heroic assumptions about the future to enjoy strong returns as shareholders. We believe that over the next several years, Asbury will continue to acquire dealerships, occasionally buyback stock and invest to improve its digital shopping experience. We wrote about Asbury in detail in our August 2021 Investor Letter.”
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Our calculations show that Asbury Automotive Group, Inc. (NYSE: ABG) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. ABG was in 32 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 22 funds in the previous quarter. Asbury Automotive Group, Inc. (NYSE: ABG) delivered a 16.27% return in the past 3 months.
In January 2022, we published an article that includes ABG in the 5 Best Stocks to Buy Today According to Value Investor David Abrams. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
