David Abrams (Trades, Portfolio) has revealed an addition to his Asbury Automotive Group Inc. (ABG, Financial) stake for the first time this year according to GuruFocus' Real-Time Picks, a Premium feature.
Abrams is the founder of Abrams Capital Management, which oversees nearly $8 billion in assets across three funds. Abrams Capital Management typically invests in public equity markets in the U.S. and utilizes a value investing approach. Abrams looks for companies in which the CEO has a significant stake, or where the CEO's salary is primarily stock-based.
On April 9, Abrams fueled up his Asbury Automotive Group (ABG, Financial) holding with the purchase of an additional 7,500 shares. The holding grew by 0.35%, the smallest addition in the holding's history, and the shares traded at an average price of $196.13 per share on the day of the transaction. Overall, the portfolio was impacted by 0.04% and GuruFocus estimates the total gain of the holding at 231.11%.
Asbury Automotive Group is a regional collection of automobile dealerships that went public in March 2002. The company operates over 90 stores with associated parts and service departments and 25 collision centers. About 80% of new vehicle revenue is from luxury and import brands. Asbury also offers third-party financing and insurance products. The company operates in nine states (mostly Texas and the Southeast), and the company entered Colorado in 2019. Its store brands include David McDavid and Park Place in Texas, Plaza in Missouri and Nalley and Crown in the southeastern U.S. Asbury generated $7.1 billion of revenue in 2020 and is based in the Atlanta area.
As of April 15, the stock was trading at $209.80 per share with a market cap of $4.06 billion. According to the GF Value Line, the shares are trading at a significantly overvalued rating.
GuruFocus gives the stock a financial strength rating of 5 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 3 out of 10. There is currently one severe warning sign issued for assets growing faster than revenue. Since 2012, the company has been growing value for shareholders as the return on invested capital has supported the weighted average cost of capital.
Abrams is the second-largest shareholder with 11% of shares outstanding. Other top shareholders include BlackRock Inc. (Trades, Portfolio), Vanguard Group Inc. (Trades, Portfolio) and Neuberger Berman Group LLC (Trades, Portfolio).
At the end of the fourth quarter of 2020, Abrams portfolio contained 17 stocks with no new holdings. It was valued at $3.55 billion and has seen a turnover rate of 1%. Top holdings at the end of the quarter were Lithia Motors Inc. (LAD, Financial), TransDigm Group Inc. (TDG, Financial), Facebook Inc. (FB, Financial), Asbury Automotive Group and PG&E Corp. (PCG, Financial).
By weight, the top three sectors represented are consumer cyclical (34.20%), communication services (16.68%) and industrials (16.60%).
Disclosure: Author owns no stocks mentioned.
Read more here:
- Value Investing Live Recap: Jason Crawshaw
- Parnassus Endeavor Fund's Top 1st-Quarter Trades
- Hennessy Japan Fund's Top Trades of the 1st Quarter
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.