We recently released a compilation of Multimillionaire David Abrams' 10 Stock Choices Boasting Substantial Growth Potential In this piece, we will examine how Asbury Automotive Group, Inc. (NYSE:ABG) measures up against other stocks offering significant growth prospects.
David Abrams founded Abrams Capital Management In 1999, prior to establishing the Boston-based investment company, Abrams gained experience working with Seth Klarman. Baupost Group For ten years, he earned his Bachelor of Arts degree in History from the University of Pennsylvania. During this time, he was part of the Board of Advisors for the College of Arts and Sciences at the university. When Abrams started working in New York during the early '80s, he lacked experience in finance. It wasn't until he worked closely with Seth Klarman that he gained comprehensive knowledge about investments. After a decade, he ventured into independent practice. As a value investor, over approximately twelve years managing his own fund, he maintained an impressive average yearly return rate close to 20%. His company operates much like a solo enterprise, supporting just a few team members. According to the form ADV filed on January 13th, 2025, Abrams Capital manages nine client accounts and oversees discretionary assets totaling $10.05 billion. In the most recent quarterly filing made in the fourth quarter of 2024 concerning managed 13F securities worth $6.22 billion, nearly all—98.7%—of these were concentrated within their top ten holdings.
Abrams is recognized for keeping a modest public presence; however, during an interview on Columbia Business School’s 'Value Investing with Legends' podcast series, he delved into the core tenets of his investment approach. He emphasizes prioritizing risk assessment over potential rewards from the outset. This underscores the inherent unpredictability of the future, a concept that Abrams encapsulates succinctly.
When you reflect on the past, there appears just one pathway that was taken, however, this does not imply that moving ahead, there will be merely one route. For the future holds numerous possible pathways.
Abram's investment strategy showcases a well-rounded approach, incorporating significant positions in thriving areas such as Industrials and Consumer Cyclical, alongside prudent stakes in traditional sectors including Communication Services. He posits that shrinking industries offer stability due to their lack of appeal for newcomers. Conversely, he notes that fast-growing segments tend to be highly competitive, requiring an intricate examination of possible rivalries. Abram elaborated on his perspective stating:
If you're dealing with an industry that's declining and struggling, it's as though nobody is eagerly rushing to join.
Abrams functions as a leader in multiple private enterprises. At present, he sits on the board of MITMCO, overseeing the Massachusetts Institute of Technology’s endowment. Before this role, Abrams spent 15 years as a trustee at Berklee College of Music, during which time he led the investment committee. Additionally, he held trusteeship at Milton Academy.
Our Methodology
To create the list of billionaire David Abrams' top 10 stock selections with significant growth prospects, we examined the Q4 2024 13F submissions made by Abrams Capital Management via Insider Monkey. For every stock identified within those documents, we assessed its upward potential according to data from CNN and then sorted them based on this predicted increase in value. Additionally, we included Abrams Capital Management’s investment level in each company along with the general trend among hedge funds regarding their interest in these assets.
The data was all sourced on May 8th.
Why do we focus on the stocks that hedge funds heavily invest in? It's straightforward: our analysis indicates that mimicking the top choices from leading hedge funds allows us to surpass the market performance. Each quarter, our quarterly newsletter recommends 14 small-cap and large-cap stocks, achieving a return of 373.4% since May 2014, which is 218 percentage points higher than its benchmark index. s ee more details here ).
A customer beaming with joy as they drive off in their brand-new vehicle from the auto dealership.
Asbury Automotive Group, Inc. (NYSE: ABG )
The stake held by Abrams Capital Management amounts to $512.44 million.
Number of Hedge Fund Owners: 32
Average Upside Potential as of May 8: 8.11%
Asbury Automotive Group, Inc., identified by the NYSE stock symbol ABG, operates as an automobile dealership within the U.S. The company delivers various automotive goods and services including both new and pre-owned cars, car repairs and upkeep, part replacements, body damage fixes, and refurbishment of second-hand autos. Additionally, they supply financial and protection items, often facilitating auto funding via external partners.
In the first quarter of 2025, Asbury's parts and service department set a new high in gross profit. There was a 5% rise in same-store gross profit from parts and services compared to the previous year, with customer-pay gross profit increasing even more at 6%. A significant boost occurred in March when this figure jumped to 7% because of warranty-related tasks. Additionally, the gross profit margin within these sectors climbed by 1.7 percentage points to reach 58.3%, thanks largely to enhanced profits from high-margin items.
The firm emphasized the expansion in customer count leading to higher gross profits at locations operational from 2014 onwards. Over ten years, this figure more than doubled and rose by approximately 97%. Asbury Automotive Group, Inc. (NYSE:ABG) posits that with an outdated vehicular stockpile coupled with the escalating intricacy of contemporary automobiles, their outlets are well-placed to seize additional opportunities for servicing business.
The Artisan Mid Cap Value Fund commented on Asbury Automotive Group, Inc. (NYSE:ABG) as follows in their Q4 2024 report. investor letter :
Our second biggest new investment was Asbury Automotive Group, Inc. (NYSE:ABG), a company operating franchised automotive dealerships. The acquisition of ABG was paired with our sale of another auto retailer, AutoNation (AN). Both entities appeal to us. Automotive retailing represents solid business prospects, and each firm exhibits strong expansion trends. Nevertheless, we favor ABG over AN due to differences in their operational strategies; specifically, AN allocates substantial resources towards developing its pre-owned vehicle division, an approach we consider less efficient from a capital utilization standpoint. Additionally, AN's captive financing unit appears riskier during periods of economic decline compared to ABG’s model. In contrast, ABG concentrates exclusively on acquiring high-performing dealerships and boasts superior profit margins within the sector. Furthermore, ABG trades at what we perceive as undervalued levels because investors generally view automobile retailers through a lens of cyclicality rather than recognizing consistent revenue streams generated by ancillary products/services divisions, increasing dominance against standalone repair shops and merchants, along with expanding participation in secondary new/used car markets.
Overall, ABG ranks 10th Among David Abrams' billionaire stock recommendations with significant growth prospects, we recognize the appeal of ABG. However, our confidence leans toward artificial intelligence stocks offering substantial financial gains over a shorter period. One such AI stock has seen an increase this year even though many well-known AI companies have declined by approximately 25%. Should you seek an AI stock showing greater promise compared to ABG yet trading below five times its earnings, review our detailed analysis provided in our latest report. cheapest AI stock .
READ NEXT: 20 Top AI Stocks You Should Consider Buying Today and 30 Top Stocks to Purchase Currently as Recommended by Billionaires .
Disclosure: No conflicts of interest. This article was initially published here. Insider Monkey .
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