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What Makes Asbury Automotive Group (ABG) an Attractive Investment?

LRT Capital Management, an investment management firm, released its October 2022 investor letter. A copy of the same can be downloaded here. The results in October were excellent, and its LRT Economic Moat strategy returned 7.38%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

LRT Capital discussed stocks like Asbury Automotive Group, Inc. (NYSE:ABG) in the investor letter. Headquartered in Duluth, Georgia, Asbury Automotive Group, Inc. (NYSE:ABG) is a US-based automotive retailer. On November 16, 2022, Asbury Automotive Group, Inc. (NYSE:ABG) stock closed at $176.19 per share. One-month return of Asbury Automotive Group, Inc. (NYSE:ABG) was 24.90% and its shares gained 4.11% of their value over the last 52 weeks.  Asbury Automotive Group, Inc. (NYSE:ABG) has a market capitalization of $3.9 billion.

LRT Capital made the following comment about Asbury Automotive Group, Inc. (NYSE:ABG) in its October investor letter:

"Asbury Automotive Group, Inc. (NYSE:ABG) is one of the largest automotive retailers in the United States. It operates 90 dealerships consisting of 112 franchises and 25 collision repair centers. The company’s stores offer new and used vehicles, parts, and service, as well as finance and insurance (F&I) products. Franchise agreements controlled by automotive manufactures and state laws create an environment of tightly controlled market entry and restricted competition.

The dealership industry is highly fragmented with 93.5% of dealers having only between 1-5 locations according to data from 202027. In fact, dealers with over 50 locations account for only 0.1% of the industry – a testament to the huge opportunity for consolidation that lies ahead. Industry dynamics, including the rising complexity of automobiles and the need for omnichannel distribution are favoring better capitalized and larger dealer groups. We believe Asbury Automotive Group has several distinct advantages, particularly its highly profitable parts and service business, its overexposure to the luxury vehicle business, which carriers the best margins, and its Clicklane omnichannel strategy. Asbury’s management has also been acting in the best interests of its shareholders by allocating capital towards acquiring dealerships to aggressively expand its business, and occasionally repurchasing stock when attractive acquisitions targets could not be found..." (Click here to read the full text)

Easiest and Cheapest Luxury Cars to Maintain
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Asbury Automotive Group, Inc. (NYSE:ABG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Asbury Automotive Group, Inc. (NYSE:ABG) at the end of the third quarter which was 27 in the previous quarter.

We discussed Asbury Automotive Group, Inc. (NYSE:ABG) in another article and shared the top stocks to buy according to David Abrams’ Abrams Capital Management. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.

 

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Disclosure: None. This article is originally published at Insider Monkey.