Latest news with #AbramsCapital
Yahoo
10-05-2025
- Business
- Yahoo
Energy Transfer LP (ET): Among Billionaire David Abrams' Stock Picks with Huge Upside Potential
We recently published a list of Billionaire David Abrams' 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Energy Transfer LP (NYSE:ET) stands against other stock picks with huge upside potential. David Abrams founded Abrams Capital Management in 1999. Before forming the Boston-based investment firm, Abrams worked at Seth Klarman's Baupost Group for 10 years. He graduated from the University of Pennsylvania with a BA degree in History, where he also served on the Board of Advisors of the College of Arts and Sciences. Abrams didn't have a finance background when he got his first job in New York in the early 1980s. He learned all about investing under Seth Klarman before setting out independently after a decade. He is a value investor, and in the ~12 years of his fund, he has achieved an annualized return of around 20%. His firm is like a one-man shop, which employs a small staff. Abrams Capital has 9 clients and discretionary assets under management (AUM) of $10.05 billion, as reported in the firm's Form ADV dated 13 January 2025. The last reported 13F filing for Q4 2024 included $6.22 billion in managed 13F securities and a top 10 holdings concentration of 98.7%. Abrams is known for maintaining a low public profile, but in a conversation on Columbia Business School's 'Value Investing with Legends' Podcast series, he discussed the surface of his foundational principles when it comes to his investment philosophy. He starts by looking at the risks first and foremost, without any consideration of prospective gains. This is a reminder that the future remains unpredictable, which Abrams puts in the following words: 'When you look back, there's one path that happened, but that doesn't mean that going forward there's only one path. In the future, there's multiple paths.' Abrams' portfolio reflects a balanced approach with exposure to growth sectors like Industrials and Consumer Cyclical, while also maintaining moderate allocations in established industries such as Communication Services. He also believes that declining industries can present stability because they attract limited new entrants. This also implies that high-growth sectors are, on the contrary, characterized by intense competition, which necessitates a more detailed analysis of potential competitive threats. Here's what Abrams had to say about this: 'If you have a shrinking industry and it's dying, it's like, people are not dying to get into that.' Abrams serves as a director of several private companies. He is currently on the board of MITMCO, which manages the MIT endowment. Previously, he was a trustee of Berklee College of Music for 15 years, where he chaired the investment committee. He was also the trustee of Milton Academy. To compile the list of billionaire David Abrams' 10 stock picks with huge upside potential, we sifted through Q4 2024 13F filings of Abrams Capital Management from Insider Monkey. From these filings, we checked each stock's upside potential from CNN and ranked the stocks in ascending order of this upside potential. We have also added Abrams Capital Management's stake in each stock as well as the broader hedge fund sentiment for it. Note: All data was sourced on May 8. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). A vast oil and gas rig silhouetted in the sunset, capturing the power of Swift Energy Company. Abrams Capital Management's Stake: $349.37 million Number of Hedge Fund Holders: 37 Average Upside Potential as of May 8: 36.18% Energy Transfer LP (NYSE:ET) owns and operates natural gas transportation pipelines and storage facilities. It has about 12,200 miles of intrastate natural gas transportation pipelines and 20,090 miles of interstate natural gas pipelines. It also sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies, and industrial end-users. Energy Transfer's NGL and refined products segment generated adjusted EBITDA of $1.1 billion in Q$ 2024, which was up from the $1.04 billion year-over-year. This was fueled by higher throughput and increased rates across the company's Gulf Coast and Mariner East pipeline operations. The company expects to invest ~$1.4 billion in NGL and refined products in 2025. For instance, the Nederland Flexport expansion is anticipated to begin ethane and propane export service by mid-2025, with ethylene export service expected to commence in Q4 2025. On April 29, Mizuho Securities adjusted its outlook on the stock and reduced the price target from $24 to $22 while maintaining an Outperform rating. This reassessment was attributed to Energy Transfer LP's (NYSE:ET) FY2025 adjusted EBITDA guidance coming in below expectations. Patient Capital Management remains optimistic on the company's long-term pricing opportunities and stated the following regarding Energy Transfer LP (NYSE:ET) in its Q3 2024 investor letter: 'Energy names disappointed in the quarter following commodity prices lower throughout the period. We took the opportunity to add to our highest conviction ideas. We look to names that have idiosyncratic opportunities and are attractive in a variety of different commodity price environments. Many see risk to energy prices over the next year as supply is expected to outstrip demand by 1.3mb/d even before assuming any incremental OPEC supply comes onto the market. With commodities, consensus is rarely right. We assess companies on through cycle returns and normalized prices. From this perspective, we see a handful of attractive opportunities, including Energy Transfer LP (NYSE:ET), Seadrill (SDRL) and Kosmos (KOS). Overall, ET ranks 4th on our list of billionaire David Abrams' stock picks with huge upside potential. While we acknowledge the potential of ET as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-05-2025
- Business
- Yahoo
Cantaloupe, Inc. (CTLP): Among Billionaire David Abrams' Stock Picks with Huge Upside Potential
We recently published a list of Billionaire David Abrams' 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Cantaloupe, Inc. (NASDAQ:CTLP) stands against other stock picks with huge upside potential. David Abrams founded Abrams Capital Management in 1999. Before forming the Boston-based investment firm, Abrams worked at Seth Klarman's Baupost Group for 10 years. He graduated from the University of Pennsylvania with a BA degree in History, where he also served on the Board of Advisors of the College of Arts and Sciences. Abrams didn't have a finance background when he got his first job in New York in the early 1980s. He learned all about investing under Seth Klarman before setting out independently after a decade. He is a value investor, and in the ~12 years of his fund, he has achieved an annualized return of around 20%. His firm is like a one-man shop, which employs a small staff. Abrams Capital has 9 clients and discretionary assets under management (AUM) of $10.05 billion, as reported in the firm's Form ADV dated 13 January 2025. The last reported 13F filing for Q4 2024 included $6.22 billion in managed 13F securities and a top 10 holdings concentration of 98.7%. Abrams is known for maintaining a low public profile, but in a conversation on Columbia Business School's 'Value Investing with Legends' Podcast series, he discussed the surface of his foundational principles when it comes to his investment philosophy. He starts by looking at the risks first and foremost, without any consideration of prospective gains. This is a reminder that the future remains unpredictable, which Abrams puts in the following words: 'When you look back, there's one path that happened, but that doesn't mean that going forward there's only one path. In the future, there's multiple paths.' Abrams' portfolio reflects a balanced approach with exposure to growth sectors like Industrials and Consumer Cyclical, while also maintaining moderate allocations in established industries such as Communication Services. He also believes that declining industries can present stability because they attract limited new entrants. This also implies that high-growth sectors are, on the contrary, characterized by intense competition, which necessitates a more detailed analysis of potential competitive threats. Here's what Abrams had to say about this: 'If you have a shrinking industry and it's dying, it's like, people are not dying to get into that.' Abrams serves as a director of several private companies. He is currently on the board of MITMCO, which manages the MIT endowment. Previously, he was a trustee of Berklee College of Music for 15 years, where he chaired the investment committee. He was also the trustee of Milton Academy. To compile the list of billionaire David Abrams' 10 stock picks with huge upside potential, we sifted through Q4 2024 13F filings of Abrams Capital Management from Insider Monkey. From these filings, we checked each stock's upside potential from CNN and ranked the stocks in ascending order of this upside potential. We have also added Abrams Capital Management's stake in each stock as well as the broader hedge fund sentiment for it. Note: All data was sourced on May 8. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). A woman at a self-service kiosk using a software service to manage logistics. Abrams Capital Management's Stake: $68.28 million Number of Hedge Fund Holders: 19 Average Upside Potential as of May 8: 45.99% Cantaloupe, Inc. (NASDAQ:CTLP) is a digital payments and software services company that provides technology solutions for the self-service commerce market. It offers integrated solutions for payment processing, logistics, and back-office management. It also offers professional network infrastructure, card processing, and customer/consumer services. Cantaloupe's subscription revenue reached $20.7 million in Q2 2025, which was up 14% year-over-year. This was fueled by the strength in micro markets, which is highlighted as the company's fastest-growing segment. This expansion is also driven by the adoption of the company's SEED software among both existing and new customers. This software is Cantaloupe's platform that provides management tools for self-service commerce operations. As the calendar year 2024 concluded, Cantaloupe reported having ~32,000 active customers and 1.3 million active devices within its ecosystem. This represented a year-over-year increase of 10% and 4%, respectively. The average revenue per unit for Q2 was $202, which was also up 12%. New customer wins in the vending sector, like EBS, further support the subscription segment's growth. Laughing Water Capital stated the following regarding Cantaloupe, Inc. (NASDAQ:CTLP) in its Q4 2024 investor letter: 'Cantaloupe, Inc. (NASDAQ:CTLP) – Cantaloupe can most simply be thought of as our vending machine software and payments company, although the industry is evolving to more fully encompass 'unattended retail,' including micro markets and smart stores. After many disappointing years, under new leadership the Company has reached an inflection point and is growing at a high teens level into a cash machine focused on stable end markets, while also growing internationally and into adjacent markets. With time I expect the market will appreciate that cash flow generated from software and payments with very little churn is valuable, and re-rate shares higher. It should be noted that while CTLP is in our top 5, it is a medium sized position.' Overall, CTLP ranks 3rd on our list of billionaire David Abrams' stock picks with huge upside potential. While we acknowledge the potential of CTLP as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than CTLP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. 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Yahoo
10-05-2025
- Business
- Yahoo
U-Haul Holding Company (UHAL.B): Among Billionaire David Abrams' Stock Picks with Huge Upside Potential
We recently published a list of Billionaire David Abrams' 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where U-Haul Holding Company (NYSE:UHAL.B) stands against other stock picks with huge upside potential. David Abrams founded Abrams Capital Management in 1999. Before forming the Boston-based investment firm, Abrams worked at Seth Klarman's Baupost Group for 10 years. He graduated from the University of Pennsylvania with a BA degree in History, where he also served on the Board of Advisors of the College of Arts and Sciences. Abrams didn't have a finance background when he got his first job in New York in the early 1980s. He learned all about investing under Seth Klarman before setting out independently after a decade. He is a value investor, and in the ~12 years of his fund, he has achieved an annualized return of around 20%. His firm is like a one-man shop, which employs a small staff. Abrams Capital has 9 clients and discretionary assets under management (AUM) of $10.05 billion, as reported in the firm's Form ADV dated 13 January 2025. The last reported 13F filing for Q4 2024 included $6.22 billion in managed 13F securities and a top 10 holdings concentration of 98.7%. Abrams is known for maintaining a low public profile, but in a conversation on Columbia Business School's 'Value Investing with Legends' Podcast series, he discussed the surface of his foundational principles when it comes to his investment philosophy. He starts by looking at the risks first and foremost, without any consideration of prospective gains. This is a reminder that the future remains unpredictable, which Abrams puts in the following words: 'When you look back, there's one path that happened, but that doesn't mean that going forward there's only one path. In the future, there's multiple paths.' Abrams' portfolio reflects a balanced approach with exposure to growth sectors like Industrials and Consumer Cyclical, while also maintaining moderate allocations in established industries such as Communication Services. He also believes that declining industries can present stability because they attract limited new entrants. This also implies that high-growth sectors are, on the contrary, characterized by intense competition, which necessitates a more detailed analysis of potential competitive threats. Here's what Abrams had to say about this: 'If you have a shrinking industry and it's dying, it's like, people are not dying to get into that.' Abrams serves as a director of several private companies. He is currently on the board of MITMCO, which manages the MIT endowment. Previously, he was a trustee of Berklee College of Music for 15 years, where he chaired the investment committee. He was also the trustee of Milton Academy. To compile the list of billionaire David Abrams' 10 stock picks with huge upside potential, we sifted through Q4 2024 13F filings of Abrams Capital Management from Insider Monkey. From these filings, we checked each stock's upside potential from CNN and ranked the stocks in ascending order of this upside potential. We have also added Abrams Capital Management's stake in each stock as well as the broader hedge fund sentiment for it. Note: All data was sourced on May 8. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). A line of rental trucks, trailers and portable units parked at a self-storage facility. Abrams Capital Management's Stake: $208.26 million Number of Hedge Fund Holders: 30 Average Upside Potential as of May 8: 80% U-Haul Holding Company (NYSE:UHAL.B) operates as a DIY moving and storage operator for household and commercial goods in the US and Canada. The company's Moving and Storage segment rents trucks, trailers, portable moving & storage units, specialty rental items, and self-storage spaces to household movers. It also sells moving supplies, towing accessories, and propane. U-Haul's Equipment Rental segment generated a $39 million increase in revenue in FQ3 2025, which represented a growth of ~4.5% year-over-year. This improvement surpassed the 1.5% and 1.7% increases seen in FQ1 and FQ2 of the same fiscal year. The growth in equipment rental revenue was driven by continued strength in average revenue per transaction, an increase in In-Town transactions, and additional last-mile revenue towards the end of the quarter. U-Haul Holding Company (NYSE:UHAL.B) also made capital expenditures for new rental equipment, which totaled $1.587 billion for the first 9 months of the fiscal year. This was a $237 million increase year-over-year. While proceeds from the sale of retired equipment decreased by $73 million to $521 million due to selling fewer units and lower average sales prices, the company is managing its fleet by adding and deleting trucks to correct imbalances caused by previous supply chain disruptions. Overall, UHAL.B ranks 2nd on our list of billionaire David Abrams' stock picks with huge upside potential. While we acknowledge the potential of UHAL.B, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than UHAL.B but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
10-05-2025
- Automotive
- Yahoo
Asbury Automotive Group, Inc. (ABG): Among Billionaire David Abrams' Stock Picks with Huge Upside Potential
We recently published a list of Billionaire David Abrams' 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Asbury Automotive Group, Inc. (NYSE:ABG) stands against other stock picks with huge upside potential. David Abrams founded Abrams Capital Management in 1999. Before forming the Boston-based investment firm, Abrams worked at Seth Klarman's Baupost Group for 10 years. He graduated from the University of Pennsylvania with a BA degree in History, where he also served on the Board of Advisors of the College of Arts and Sciences. Abrams didn't have a finance background when he got his first job in New York in the early 1980s. He learned all about investing under Seth Klarman before setting out independently after a decade. He is a value investor, and in the ~12 years of his fund, he has achieved an annualized return of around 20%. His firm is like a one-man shop, which employs a small staff. Abrams Capital has 9 clients and discretionary assets under management (AUM) of $10.05 billion, as reported in the firm's Form ADV dated 13 January 2025. The last reported 13F filing for Q4 2024 included $6.22 billion in managed 13F securities and a top 10 holdings concentration of 98.7%. Abrams is known for maintaining a low public profile, but in a conversation on Columbia Business School's 'Value Investing with Legends' Podcast series, he discussed the surface of his foundational principles when it comes to his investment philosophy. He starts by looking at the risks first and foremost, without any consideration of prospective gains. This is a reminder that the future remains unpredictable, which Abrams puts in the following words: 'When you look back, there's one path that happened, but that doesn't mean that going forward there's only one path. In the future, there's multiple paths.' Abrams' portfolio reflects a balanced approach with exposure to growth sectors like Industrials and Consumer Cyclical, while also maintaining moderate allocations in established industries such as Communication Services. He also believes that declining industries can present stability because they attract limited new entrants. This also implies that high-growth sectors are, on the contrary, characterized by intense competition, which necessitates a more detailed analysis of potential competitive threats. Here's what Abrams had to say about this: 'If you have a shrinking industry and it's dying, it's like, people are not dying to get into that.' Abrams serves as a director of several private companies. He is currently on the board of MITMCO, which manages the MIT endowment. Previously, he was a trustee of Berklee College of Music for 15 years, where he chaired the investment committee. He was also the trustee of Milton Academy. To compile the list of billionaire David Abrams' 10 stock picks with huge upside potential, we sifted through Q4 2024 13F filings of Abrams Capital Management from Insider Monkey. From these filings, we checked each stock's upside potential from CNN and ranked the stocks in ascending order of this upside potential. We have also added Abrams Capital Management's stake in each stock as well as the broader hedge fund sentiment for it. Note: All data was sourced on May 8. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). A customer smiling delightedly after driving away in their new car from the automotive retail shop. Abrams Capital Management's Stake: $512.44 million Number of Hedge Fund Holders: 32 Average Upside Potential as of May 8: 8.11% Asbury Automotive Group, Inc. (NYSE:ABG) is an automotive retailer in the US. It offers a range of automotive products and services, such as new & used vehicles, vehicle repair & maintenance services, replacement parts, collision repair, and reconditioning of used vehicles. It also provides finance and insurance products, like arranging vehicle financing through third parties. Asbury's parts and service division achieved a record in gross profit in Q1 2025. Same-store gross profit in parts and service saw an increase of 5% year-over-year, with customer pay gross profit specifically up by 6%. This growth particularly accelerated in March and reached 7% due to warranty work. The gross profit margin for the parts and service business expanded by 1.7% to 58.3%, fueled by the segment's increased profitability of higher-margin components. The company also highlighted the customer growth pay gross profit at stores they have operated since 2014. This metric ~doubled and increased by 97% over 10 years. Asbury Automotive Group, Inc. (NYSE:ABG) believes that the aging vehicle fleet and the increasing complexity of modern cars position the company's stores favorably to capture further service growth. Artisan Mid Cap Value Fund stated the following regarding Asbury Automotive Group, Inc. (NYSE:ABG) in its Q4 2024 investor letter: 'Our next largest new position was Asbury Automotive Group, Inc. (NYSE:ABG), a franchised automative dealer. Our purchase of ABG was in conjunction with selling auto retailer AutoNation (AN). We like both companies. Auto dealerships are good businesses, and both companies are growing well. However, we prefer ABG's business mix to that of AN as AN is investing more heavily in its used car dealership business, which we believe is a poorer use of capital, and its captive finance arm is more vulnerable in an economic downturn. ABG remains solely focused on buying and running top-quality dealerships, and it has the best margins in the industry. ABG is also selling cheaply. As we see it, the market still thinks auto dealerships are highly cyclical, not giving them enough credit for their steadily growing parts and services business, secular market share gains versus independent mechanics and retailers, and their penetration growth in the used car market.' Overall, ABG ranks 10th on our list of billionaire David Abrams' stock picks with huge upside potential. While we acknowledge the potential of ABG as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ABG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-05-2025
- Automotive
- Yahoo
Lithia Motors, Inc. (LAD): Among Billionaire David Abrams' Stock Picks with Huge Upside Potential
We recently published a list of Billionaire David Abrams' 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Lithia Motors, Inc. (NYSE:LAD) stands against other stock picks with huge upside potential. David Abrams founded Abrams Capital Management in 1999. Before forming the Boston-based investment firm, Abrams worked at Seth Klarman's Baupost Group for 10 years. He graduated from the University of Pennsylvania with a BA degree in History, where he also served on the Board of Advisors of the College of Arts and Sciences. Abrams didn't have a finance background when he got his first job in New York in the early 1980s. He learned all about investing under Seth Klarman before setting out independently after a decade. He is a value investor, and in the ~12 years of his fund, he has achieved an annualized return of around 20%. His firm is like a one-man shop, which employs a small staff. Abrams Capital has 9 clients and discretionary assets under management (AUM) of $10.05 billion, as reported in the firm's Form ADV dated 13 January 2025. The last reported 13F filing for Q4 2024 included $6.22 billion in managed 13F securities and a top 10 holdings concentration of 98.7%. Abrams is known for maintaining a low public profile, but in a conversation on Columbia Business School's 'Value Investing with Legends' Podcast series, he discussed the surface of his foundational principles when it comes to his investment philosophy. He starts by looking at the risks first and foremost, without any consideration of prospective gains. This is a reminder that the future remains unpredictable, which Abrams puts in the following words: 'When you look back, there's one path that happened, but that doesn't mean that going forward there's only one path. In the future, there's multiple paths.' Abrams' portfolio reflects a balanced approach with exposure to growth sectors like Industrials and Consumer Cyclical, while also maintaining moderate allocations in established industries such as Communication Services. He also believes that declining industries can present stability because they attract limited new entrants. This also implies that high-growth sectors are, on the contrary, characterized by intense competition, which necessitates a more detailed analysis of potential competitive threats. Here's what Abrams had to say about this: 'If you have a shrinking industry and it's dying, it's like, people are not dying to get into that.' Abrams serves as a director of several private companies. He is currently on the board of MITMCO, which manages the MIT endowment. Previously, he was a trustee of Berklee College of Music for 15 years, where he chaired the investment committee. He was also the trustee of Milton Academy. To compile the list of billionaire David Abrams' 10 stock picks with huge upside potential, we sifted through Q4 2024 13F filings of Abrams Capital Management from Insider Monkey. From these filings, we checked each stock's upside potential from CNN and ranked the stocks in ascending order of this upside potential. We have also added Abrams Capital Management's stake in each stock as well as the broader hedge fund sentiment for it. Note: All data was sourced on May 8. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). A customer in a store, examining a new vehicle on the showroom floor. Abrams Capital Management's Stake: $854.68 million Number of Hedge Fund Holders: 45 Average Upside Potential as of May 8: 30.94% Lithia Motors, Inc. (NYSE:LAD) is an automotive retailer in the US, the UK, and Canada. It operates in two segments: Vehicle Operations and Financing Operations. It sells its products and services through the Driveway and Greencars brand names through a physical location, e-commerce platforms, and finance & fleet management solutions. The company's finance operations segment operates under DFC (Driveway Finance Corp) and delivered $12.5 million in income in Q1 2025. This was an improvement from a $1.7 million loss year-over-year. Following a full year of profitability in 2024, Lithia Motors, Inc. (NYSE:LAD) anticipates a consistent earnings trajectory for DFC in 2025. During Q1, DFC originated $623 million in loans and marked a 24% sequential increase. This brought the total portfolio balance to over $4 billion. Lithia emphasizes that each loan originated by DFC contributes up to three times more profit than traditional indirect lending. Bank of America analyst John Murphy maintained his Buy rating on the stock, while increasing the price target from $410 to $460. River Road Small-Mid Cap Value Fund highlighted the company's overall resiliency and stated the following regarding Lithia Motors, Inc. (NYSE:LAD) in its Q4 2024 investor letter: 'Another top contributor during the quarter was Lithia Motors, Inc. (NYSE:LAD) one of the largest global automotive retailers operating in North America and the United Kingdom. In late June, the auto industry was impacted by a cyberattack on CDK Global's dealership management system, which runs all back-office functions at Lithia as well as over 85% of all franchised dealers in the United States. In its Q2 2024 earnings release, LAD reported a -6.4% decline in same-store sales, driven primarily by a -4.7% decline in new vehicle units as LAD was not able to process sale transactions late in the quarter due to the CDK outage. Despite lower same-store sales, LAD outperformed expectations as its cost reduction initiatives and a shift in capital allocation resulted in sequential margin improvement and a lower share count. The company achieved its $150MM in annualized cost savings target ahead of schedule and now expects to double these savings by the end of 2024 through further inventory optimization and reductions. This will result in the all-important SG&A as a percentage gross profit declining to the mid-60s range and in line with LAD's long-term target. Acquisitions have added $27B in annualized revenues since 2020, ahead of LAD's goal of adding $25B in acquired revenues by 2025. Given the current high private market multiples for auto dealerships, LAD's management has shifted its capital allocation toward share repurchases, buying back 2.9% of the company in Q2. With low net leverage of 2.3x and year-to-date free cash flow of $740MM, we expect management to continue repurchasing shares aggressively. During the quarter, we added to the position prior to its Q2 results.' Overall, LAD ranks 6th on our list of billionaire David Abrams' stock picks with huge upside potential. While we acknowledge the potential of LAD as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than LAD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
