Jeffrey Smith Sees 100% Upside In This Auto Supplier, Shows How It Can Be Unlocked

Advance Auto Parts’ second quarter results released in mid-August did show a lot of promising signs, leading to a surge of more than 10% in its stock price. While revenue was down slightly, earnings were up to $2.27 per share, suggesting improving margins or reduced expenses (or both). The stock was also buoyed in early July when it was added to the S&P 500, replacing the departed Family Dollar Stores, Inc. (NYSE:FDO).

Smith’s position vaults him to the top of Advance Auto Parts’ shareholder list, of those investors in our database. Fir Tree, founded by Jeffrey Tannenbaum, had the largest position as of June 30 at 1.58 million shares worth over $251 million. Billionaire Stephen Mandel of Lone Pine Capital came next with a new position of 1.22 million shares. Robert Pitts’ Steadfast Capital Management was another investor who opened a new position during the second quarter, of just under 496,000 shares.

Overall, hedge fund ownership of Advance Auto Parts declined during the second quarter, dipping by eight to 34, while the value of their holdings fell by about $260 million to $1.12 billion, even though shares rose during the quarter, so hedge fund sentiment was not overly positive at the time. Given the improving results and the involvement of the respected Jeffrey Smith, we believe that is about to change.

Disclosure: None