Miller Value Partners, an investment management firm, published its “Deep Value Strategy” first quarter 2022 investor letter – a copy of which can be downloaded here. After a challenging back half of 2021, where the portfolio experienced significant valuation compression, the Deep Value Strategy bounced back and has had a strong start to the year. For the quarter, the Deep Value Strategy was up more than 30%, significantly ahead of the S&P 1500 Value Index and the overall market. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Miller Value Partners Deep Value Strategy mentioned American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) and explained its insights for the company. Founded in 1994, American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) is a Detroit, Michigan-based automobile driveline and drivetrain components and systems manufacturer with an $816.2 million market capitalization. American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) delivered a -23.58% return since the beginning of the year, while its 12-month returns are down by -32.93%. The stock closed at $7.13 per share on May 13, 2022.
Here is what Miller Value Partners Deep Value Strategy has to say about American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) in its Q1 2022 investor letter:
“American Axle (NYSE:AXL) is a tier 1 vertically integrated supplier focused on automotive propulsion systems to support internal combustion engines, hybrid, and electric vehicles. The share price has significantly underperformed over the past couple of years, down more than 70% below its 2015 highs. The company is well positioned for a recovery in North America auto market (nearly 80% of revenues) and should benefit from ongoing consumer demand in the large truck marketplace (half of its revenue). Similar to Tenneco, American Axle has less exposure to EVs versus its peers. However, the company has been increasing new scalable electrification propulsion technologies. The marketplace appears to be providing limited value to American Axle’s innovation as well as recent new wins which secure more than $10B in revenue from 2025 to 2030. The company’s vertical integration while helping the company operate in the current challenging environment also provides nice contribution margins (more than 25%) as industry volumes improve. Management expects to generate significant free cash flow over the next couple of years. AXL’s share price looks significantly mispriced at less than 2x cash flow and approximately 50% normalized free cash flow yield. Upside potential could be multiples of AXL’s current share price as the company continues focus on de-levering their balance sheet towards 2x net debt leverage target.”
Our calculations show that American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) was in 20 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 20 funds in the previous quarter. American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) delivered a -10.09% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
