Andvari Associates, an investment management firm, released its second quarter 2024 investor letter, a copy of which can be downloaded here. Year to date, the portfolio appreciated 7.7% net of fees while the SPDR S&P 500 ETF rose 15.2%. There are two primary causes of Andvari’s trailing returns: (1) the firm does not hold some of the biggest and best-performing companies, such as Nvidia, Apple, Microsoft, Google, Meta, and Amazon; and (2) poor performance of Mesa. Andvari invested in a diverse range of companies in terms of market cap. Andvari’s performance in the first half of the year is in line with what the market typically generates in a complete year. It can feel disappointing, though, if compared with higher performance of the large caps. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.
Andvari Associates highlighted stocks like O’Reilly Automotive, Inc. (NASDAQ:ORLY) in the second quarter 2024 investor letter. O’Reilly Automotive, Inc. (NASDAQ:ORLY) is a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories. The one-month return of O’Reilly Automotive, Inc. (NASDAQ:ORLY) was 11.79%, and its shares gained 24.22% of their value over the last 52 weeks. On July 30, 2024, O’Reilly Automotive, Inc. (NASDAQ:ORLY) stock closed at $1,140.90 per share with a market capitalization of $66.216 billion.
Andvari Associates stated the following regarding O’Reilly Automotive, Inc. (NASDAQ:ORLY) in its Q2 2024 investor letter:
“O’Reilly Automotive, Inc. (NASDAQ:ORLY) is the third largest auto parts retailer in the country with over 6,095 stores in North America and Mexico. Their sales are split 60% to people who want to repair their own car and 40% to professionals who fix and maintain cars for a living. Following the common theme, O’Reilly sells essential products that people will buy regardless of the state of the economy.
We love that this business gushes cash—it had an extraordinary return on invested capital of 43.7% in 2023. O’Reilly has also had negative working capital since 2017, which means customers pay O’Reilly before O’Reilly needs to pay its suppliers. Looking at its capex, O’Reilly does have a higher capex ratio when compared to the others in the table. However, the ratio is still quite low considering O’Reilly is growing its store count in the range of 150-200 per year. At this rate, O’Reilly is expanding its store count by about 3% annually. Also driving the recent increase in capex has been a shift towards owning their stores rather than leasing them.”
A mechanic working on a car in an auto shop, skillfully replacing the aftermarket parts.
O’Reilly Automotive, Inc. (NASDAQ:ORLY) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held O’Reilly Automotive, Inc. (NASDAQ:ORLY) at the end of the first quarter which was 52 in the previous quarter. O’Reilly Automotive, Inc.’s (NASDAQ:ORLY) comparable store sales increased by 2.3% at the end of the second quarter. While we acknowledge the potential of O’Reilly Automotive, Inc. (NASDAQ:ORLY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed O’Reilly Automotive, Inc. (NASDAQ:ORLY) and shared TimesSquare Capital U.S. Focus Growth Strategy’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2024 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.