AutoNation, Inc. (AN) And TrueCar Inc (TRUE) Spike On Breakup: Which Do Hedge Funds Prefer?

What does the smart money think about AutoNation, Inc. (NYSE:AN) and TrueCar Inc (NASDAQ:TRUE)?

At the end of the first quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in AutoNation, 11% less than from the previous quarter. This decrease is also reflected in how much hedge funds had invested in AutoNation, as the total value of their holdings decreased by 11.55% to $1.53 billion by March 31 compared to $1.73 billion on December 31. This decrease is noteworthy, as the stock gained 6.49% in the first quarter. Year-to-date, the stock has gained 2.68%, while over the last 12 months, it has gained 2.88%. The aforementioned ESL Investments holds the most valuable position in AutoNation, Inc. (NYSE:AN), as it had about 8.74 million shares of the firm, worth $561.9 million at the end of the first quarter. Coming in second was Horizon Asset Management, led by Murray Stahl, which held a $286.7 million position of 4.46 million shares.

On the other hand, TrueCar Inc (NASDAQ:TRUE) seems to be a darling among the hedge funds we track as of late. By the end of March, there were 20 hedge funds among those we track with long positions in TrueCar, up 33% from the previous quarter. The total value of their holdings also increased by 12.02% to $138.96 million, up significantly considering the stock tanked by 22.05% in the first quarter. Karthik Sarma’s SRS Investment Management held the biggest position in TrueCar among the funds we track. SRS owned 2 million shares worth $35.7 million at the end of the first quarter. Coming in second is Donald Chiboucis’ Columbus Circle Investors, which held 1.22 million shares, valued at $21.80 million.

Though AutoNation still has greater overall hedge fund ownership than TrueCar, there was a clear swing in momentum taking place between the two. It will be interesting to see if this holds or even intensifies following their split, or whether it does in fact reverse course. With TrueCar now down by more than 50% year-to-date, we believe it’s a good opportunity to buy-in to the stock, while AutoNation, though down over the past few months, is still trading relatively close to its all-time high. As such, we don’t recommend buying into it at this time.

Disclosure: None