Asset management firm Bonhoeffer Capital Management has released its fourth quarter 2023 investor letter. You can download a copy of the same here. Throughout 2023, the Bonhoeffer Fund shifted slow-growth companies to strong-growth companies in temporarily depressed industries. The fund is exploring such possibilities again this year. The fund returned 12.9% net of fees in the fourth quarter of 2023, and 17.0% for all of 2023. Over the same period, the broad index MSCI World (ex-US) returned 9.8%, and its closest benchmark, the DFA International Small Cap Value Fund, returned 9.3%. The fund's portfolio includes some of the highest quality businesses in the fund's history. Plus, check out the fund's top 5 holdings to find out the best stocks for 2023.
Bonhoeffer Capital Management highlighted stocks such as Asbury Automotive Group (NYSE:ABG) in its Q4 2023 Investor Letter. Asbury Automotive Group (NYSE:ABG), headquartered in Duluth, Georgia, is a U.S.-based automotive retailer. Asbury Automotive Group (NYSE: ABG) stock closed at $221.01 per share on February 14, 2024. Asbury Automotive Group (NYSE: ABG)'s 1-month return is 8.66%, and the company's stock has lost 5.35% of its value over the past 52 weeks. Asbury Automotive Group (NYSE:ABG) has a market capitalization of $4.548 billion.
Bonhoeffer Capital Management said the following about Asbury Automotive Group (NYSE:ABG) in its Q4 2023 investor letter:
“Our television broadcast franchises, leasing, building products distributors and distributors, plastic packaging, and roll-on-roll-off (“RORO”) transportation fall into this category. One trend we find particularly attractive in these companies is the generation of growth through acquisitions. This provides synergies and operational leverage associated with vertical and horizontal integration. Increased cash flow from acquisitions and subsequent synergies is used to repay debt and repurchase stock, and the process repeats. The effectiveness of this strategy depends on the spread between borrowing rates. As interest rates have risen over the past 12 months, the economics of this strategy have decreased, but there are still large spreads if you can buy assets at the right price. Some companies are reducing debt to lessen the impact of rising interest rates on their earnings.
Asbury Automotive Group, Inc. (NYSE:ABG), a US-based auto dealer group, has a portfolio holding and is an example of a private LBO. Stock buybacks are on the rise, considering Asbury's current valuation at an 18% earnings yield and, more importantly, a five-year forward earnings yield of 38%. Management has developed a long-term plan that includes acquisitions and operational leverage from Internet sales and prepaid service plans. Based on management's plans, annual growth in net income is expected to be 25% over the next two years. Holding the current modest 6x earnings constant, earnings growth implies a total return of 25%…” (Click here to read the full story)
A customer smiles happily after driving away from an auto retail store in a new car.
Asbury Automotive Group (NYSE:ABG) isn't on the list of 30 most popular stocks among hedge funds. Our database shows that 30 hedge fund portfolios owned Asbury Automotive Group (NYSE:ABG) at the end of the third quarter, compared to 27 in the prior quarter.
We discussed Asbury Automotive Group (NYSE:ABG) in a separate article and shared Black Bear Value Partners' view on the company. Additionally, for investor letters from hedge funds and other leading investors, please visit our Hedge Fund Investor Letters Q4 2023 page.
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Disclosure: None. This article was originally published on Insider Monkey.
