Is it Still Safe to Invest in Carvana (CVNA)?

ClearBridge Investments, an investment management firm, published its “Select Strategy” fourth quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Select Strategy underperformed its Russell 3000 Index benchmark in the fourth quarter. On an absolute basis, the Strategy had gains in eight of the 10 sectors in which it was invested during the quarter (out of 11 sectors total). The industrials and financials sectors were the primary contributors to performance while the communication services and consumer discretionary sectors were detractors. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

ClearBridge Investments Select Strategy, in its Q4 2021 investor letter, mentioned Carvana Co. (NYSE:CVNA) and discussed its stance on the firm. Founded in 2012, Carvana Co. (NYSE:CVNA) is a Tempe, Arizona-based online used car retailer with a $121.46 billion market capitalization, and is currently spearheaded by its CEO, Ernest Garcia III. Carvana Co. (NYSE:CVNA) delivered a -47.60% return since the beginning of the year, while its 12-month returns are down by -54.56%. The stock closed at $121.46 per share on April 05, 2022. 

Here is what ClearBridge Investments Select Strategy has to say about Carvana Co. (NYSE:CVNA) in its Q4 2021 investor letter:

“A handful of disruptors accounted for most of the underperformance during the quarter. For the most part, the fundamentals and long-term theses for owning these companies remain intact. Shares of Carvana, for example, took a breather after gaining more than 600% in a rally from the March 2020 lows. The online platform for used car sales keeps expanding its footprint to more U.S. markets, taking advantage of a very fragmented and locally-based used car business. In an inflationary environment for used vehicles, Carvana’s volumes and pricing remain strong and it should benefit from continued upward pricing trends as new car models add more features and shift to electrification.”

Our calculations show that Carvana Co. (NYSE:CVNA) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Carvana Co. (NYSE:CVNA) was in 56 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 58 funds in the previous quarter. Carvana Co. (NYSE:CVNA) delivered a -38.66% return in the past 3 months.

In February 2022, we also shared another hedge fund’s views on Carvana Co. (NYSE:CVNA) in another article. You can find other 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.