The London Company, an investment management company, released “The London Company SMID Cap Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. U.S. equities traded higher during the fourth quarter, with most of the major indices posting positive gains. Economic data released during the quarter was positive, though somewhat inconsistent. The portfolio returned 1.9% (1.7%, net) in the quarter compared to a 0.6% increase for the Russell 2500 Index. Both stock selection and sector exposure led the portfolio to outperform in the quarter. For more information on the fund’s top picks in 2024, please check its top five holdings.
In its fourth quarter 2024 investor letter, The London Company SMID Cap Strategy emphasized stocks such as Credit Acceptance Corporation (NASDAQ:CACC). Credit Acceptance Corporation (NASDAQ:CACC) is a financing company that offers financing programs, and related products and services. The one-month return of Credit Acceptance Corporation (NASDAQ:CACC) was -8.67%, and its shares lost 12.73% of their value over the last 52 weeks. On February 25, 2025, Credit Acceptance Corporation (NASDAQ:CACC) stock closed at $479.51 per share with a market capitalization of $5.813 billion.
The London Company SMID Cap Strategy stated the following regarding Credit Acceptance Corporation (NASDAQ:CACC) in its Q4 2024 investor letter:
“Initiated: Credit Acceptance Corporation (NASDAQ:CACC) – CACC provides dealer financing programs, enabling automobile dealers to sell vehicles to consumers with poor credit. Operating as a lender of last resort, CACC serves a critical role for a large cohort of borrowers. CACC’s competitive advantage lies in its 50-year track record, partnerships with over 10,000 dealers, and robust data models that predict loan defaults with remarkable accuracy. Recent challenges from 2021-2022 loan vintages are improving as stronger 2023-2024 loans gain traction. Rising interest rates and reduced competition are driving double-digit growth in market share. Trading at a 12% earnings yield with a strong balance sheet, CACC offers a compelling risk/reward backed by decades of consistent profitability and shareholder-focused management.”
A businessman signing a loan contract with a satisfied smile.
Credit Acceptance Corporation (NASDAQ:CACC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held Credit Acceptance Corporation (NASDAQ:CACC) at the end of the fourth quarter compared to 32 in the third quarter. While we acknowledge the potential of Credit Acceptance Corporation (NASDAQ:CACC) 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 Credit Acceptance Corporation (NASDAQ:CACC) and shared Curreen Capital’s views on the company. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.