RV Capital, an investment management firm, published its “Business Owner Fund” second quarter 2022 investor letter – a copy of which can be seen here. The NAV of the Business Owner Fund was €600.80 as of 30 June 2022. The NAV decreased 40.2% since the start of the year and increased 505.5% since inception on 30 September 2008. The compound annual growth rate since inception is 14.0%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, RV Capital mentioned Credit Acceptance Corporation (NASDAQ:CACC) and explained its insights for the company. Founded in 1972, Credit Acceptance Corporation (NASDAQ:CACC) is a Southfield, Michigan-based auto finance company with a $5.9 billion market capitalization. Credit Acceptance Corporation (NASDAQ:CACC) delivered a -33.43% return since the beginning of the year, while its 12-month returns are down by -26.40%. The stock closed at $457.80 per share on October 06, 2022.
Here is what RV Capital has to say about Credit Acceptance Corporation (NASDAQ:CACC) in its Q2 2022 investor letter:
“At the start of the year, the five largest companies in the fund includes Credit Acceptance. Our largest position both at the start of the year and today is Credit Acceptance, a lender to subprime borrowers to purchase a used car. I explained our reasons for investing in Credit Acceptance in my 2014 letter. I was very optimistic about the investment then – naturally, otherwise why else invest – but the investment has surpassed my high expectations. From 2014 through 2021, adjusted earnings per share grew by 21.4%, 19.6%, 15.7%, 38.9%, 22.2%, 10.3%, and 34.2% respectively. This is the stuff that investing dreams are made of – each year varied from good to fantastic.
Great though the company’s operational performance was, what supercharged growth in earnings per share was the company’s willingness to repurchase its own shares. At the time we invested, the company had 20.6 m shares outstanding. As of 25 July this year, that number stands at 12.9 m. This means that not only has the company greatly increased its earnings power, but our share of those earnings has increased by 60% over the holding period.
If you think the investment has been plain sailing though, you would be mistaken. I have lost count of the number of times, the share price fell by 10%, 20%, or more in a single day based on some piece of news or other that supposedly impaired the company’s value. It is a wonderful illustration of Ben Graham’s dictum that in the short run the market is a voting machine and in the long run, it is a weighing machine…” (Click here to see the full text)
Our calculations show that Credit Acceptance Corporation (NASDAQ:CACC) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Credit Acceptance Corporation (NASDAQ:CACC) was in 23 hedge fund portfolios at the end of the second quarter of 2022, compared to 23 funds in the previous quarter. Credit Acceptance Corporation (NASDAQ:CACC) delivered a -12.00% return in the past 3 months.
In May 2022, we also shared another hedge fund’s views on Credit Acceptance Corporation (NASDAQ:CACC) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
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Disclosure: None. This article is originally published at Insider Monkey.
