Black Bear Value Partners, an investment management firm, published its fourth quarter 2023 investor letter, a copy of which can be downloaded here. Black Bear Value Fund returned -1.1% in December and +17.7% in 2023 and the S&P 500 returned +4.5% in December and +26.3% in 2023. HFRI Value Index returned +4.4% and +13.8%, respectively for the same periods. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Black Bear Value Partners featured stocks such as Asbury Automotive Group, Inc. (NYSE:ABG) in its Q4 2023 investor letter. Headquartered in Duluth, Georgia, Asbury Automotive Group, Inc. (NYSE:ABG) is a US-based automotive retailer. On January 31, 2024, Asbury Automotive Group, Inc. (NYSE:ABG) stock closed at $209.06 per share. One-month return of Asbury Automotive Group, Inc. (NYSE:ABG) was 1.00%, and its shares lost 13.51% of their value over the last 52 weeks. Asbury Automotive Group, Inc. (NYSE:ABG) has a market capitalization of $4.302 billion.
Black Bear Value Partners stated the following regarding Asbury Automotive Group, Inc. (NYSE:ABG) in its fourth quarter 2023 investor letter:
“Asbury Automotive Group, Inc. (NYSE:ABG) operates auto dealerships across the United States. The strength of the model comes from the back of the house in parts and services where more than 50% of the profits come from. We are exiting a period of high margins on new and used car sales. As inventories normalize and interest rates rise, I fully expect the dealers to make less profit (called the GPU) when selling a car. Less discussed is while profits per car are at all-time highs, the volumes sold have mirrored prior recessions. My expectation is that dealers will likely make less per car but will mitigate some of that pressure by selling more cars, especially used vehicles, as prices drop.
When an auto dealer sells a car to a consumer, they capture both the trade-in (inventory to sell) and the relationship for parts and services. It is a razor-razorblade model in a highly fragmented industry (many dealerships are owned privately by families). The large dealer groups have transitioned to an omni-channel model where much of the selling/pre-buy activity can be done online, reducing the need for headcount and making the transaction smoother for their customers. The lower operating costs of the business are not appreciated by the market. They are appreciated by us and the management teams as most dealers, including ABG, have been buying in lots of stock with their free-cash flow.
ABG should be able to earn $30-$40 in free-cash flow per share in a “normal” year. At year-end pricing that implies a 13-18% annual yield. I hope management continues to buy back a lot of stock at these levels!”
An online automotive marketplace platform with a large selection of car listings.
Asbury Automotive Group, Inc. (NYSE:ABG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held Asbury Automotive Group, Inc. (NYSE:ABG) at the end of third quarter which was 27 in the previous quarter.
We discussed Asbury Automotive Group, Inc. (NYSE:ABG) in another article and shared Vltava Fund’s views on the company. In addition, please check out our hedge fund investor letters Q4 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.
