David Abrams (Trades, Portfolio), leader of Abrams Capital Management, disclosed that he boosted his stake in Camping World Holdings Inc. (CWH, Financial) by 10.48% on April 23.
A former protégé of Seth Klarman (Trades, Portfolio), the guru follows a fundamental, value-oriented approach to stock picking, investing in a concentrated number of positions. His Boston-based firm looks for long-term opportunities across a wide array of asset types in both foreign and domestic markets.
According to GuruFocus Real-Time Picks, a Premium feature, Abrams invested in 413,446 shares of the Illinois-based company, bringing his total holding to 4.35 million shares, which represent roughly 2.1% of the equity portfolio. The stock traded for an average price of $13.44 per share.
The company, which sells recreational vehicles and camping gear, has a $1.30 billion market cap; its shares were trading around $14.82 on Monday with a price-earnings ratio of 42.34, a price-book ratio of 29.23 and a price-sales ratio of 0.20.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
Camping World reported its fourth-quarter and full-year 2018 results on March 7. For the quarter, it posted a loss of 83 cents per share. Revenue grew 10.6% to $982.4 million, topping expectations of $978.3 million.
For the full year, the company recorded earnings of 28 cents per share on $4.7 billion in revenue, which grew 12% from the prior-year quarter.
As a result of issuing $772.9 billion in new long-term debt over the past three years, GuruFocus rated Camping World’s financial strength 5 out of 10. In addition, the Altman Z-Score of 2.47 indicates the company is under some fiscal pressure.
The company’s profitability and growth fared a bit better, scoring a 7 out of 10 rating. Despite recording a decline in the operating margin and a slowdown in revenue per share growth over the last 12 months, Camping World is supported by a moderate Piotroski F-Score of 5, which suggests business conditions are stable, and strong returns on equity and capital.
Of the gurus invested in Camping World as of the fourth quarter, Abrams has the largest stake with approximately 4.4% of outstanding shares. Ron Baron (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio) are also shareholders.
Portfolio composition
Abrams $2.42 billion equity portfolio, which is composed of 19 stocks as of the fourth quarter, is largely invested in the consumer cyclical and financial services sectors.
His five largest holdings as of the end of the quarter were Franklin Resources Inc. (BEN, Financial), O’Reilly Automotive Inc. (ORLY, Financial), Teva Pharmaceutical Industries Ltd. (TEVA, Financial), Amerco Inc. (UHAL, Financial) and The Western Union Co. (WU, Financial).
Disclosure: No positions.
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