5 Best Stocks to Buy According to CAS Investment Partners

In this article, we discuss 5 best stocks CAS Investment Partners is buying. If you want to read our detailed analysis of CAS Investment Partners’ history, investment philosophy, and hedge fund performance, go directly to This Hedge Fund is Up 88% This Year, Here is What It’s Buying.

5. Credit Acceptance Corporation (NASDAQ:CACC)

Net Gains: 58%

Credit Acceptance Corporation (NASDAQ:CACC) provides financing programs and related services to car dealers in the US. CAS Investment Partners confirmed a 13.7% stake in Credit Acceptance Corp worth $24.90 million in the fourth quarter of 2018. The hedge fund had been buying stakes in the company as early as the fourth quarter of 2017 at an average price of $297 a share. With the investment, the hedge fund expanded its footprint into the financial services sector as the company offers financing programs and related products and services to automobile dealers in the US.

By the time CAS investment partners exited their positions in the company in 2019, the stock had gained 58%, a significant return from the initial investment.

Out of the 910 hedge funds polled by Insider Monkey during the second quarter of 2023, 24 had also owned Credit Acceptance Corporation (NASDAQ:CACC)’s shares. Credit Acceptance Corporation (NASDAQ:CACC)’s largest investor in our database is Bo Shan’s Gobi Capital which owns 474,927 shares that are worth $241.23 million.

Credit Acceptance Corporation (NASDAQ:CACC) has a ‘Hold’ rating from one analyst. The average target is $355, which is -24.38% lower than the current price of $469.48.

4. Carvana Co. (NYSE:CVNA)

Net Gains: 62%

Carvana Co. (NYSE:CVNA) operates an e-commerce platform for buying and selling used cars in the US. The platform makes it easy for people to research and identify a car, inspect it using 360-degree vehicle imaging technology, obtain financing, and purchase it

Sosin first got involved in Carvana Co. (NYSE:CVNA) in the first quarter of 2018 by purchasing 2 million shares worth $46 million, which accounted for 20% of its portfolio at the time. CAS Investment Partners would increase stakes in the company that saw the stock account for 42% of the portfolio as of the end of 2019.

The hedge fund increased stakes, taking total holdings to 6.8 million shares as of the end of last year. While the hedge fund purchased the stock for about $20 a share, the stock gained more than 1500% by mid-year 2021, generating significant returns for the hedge fund. Nevertheless, the stock has given back a good chunk of the gains and is only up by about 62% compared to the initial purchase price.

In Q2 2023, 41 out of the 910 hedge funds polled by Insider Monkey had also invested in Carvana Co. (NYSE:CVNA). Zachary Sternberg And Benjamin Stein’s Spruce House Investment Management is Carvana Co. (NYSE:CVNA)’s largest investor. It owns 10 million shares that are worth $259.20 million. On September 18, Wedbush raised the price target on Carvana Co. (NYSE:CVNA) to $48 from $40 and upgraded it to ‘Neutral’ from ‘Underperform.’

3. World Acceptance Corporation (NASDAQ:WRLD)

Net Gains: 140%

World Acceptance Corporation (NASDAQ:WRLD) is a consumer finance business company that offers short-term small installment loans and medium-term larger installment loans. The company also offers individuals-related credit insurance and ancillary products and services.

CAS Investment Partners first invested in World Acceptance Corporation (NASDAQ:WRLD) in the fourth quarter of 2017 and has continued to increase stakes. The company now accounts for 15% of the hedge fund portfolio. The stock has been one of the best-performing in the portfolio, with gains of more than 140% since the first investment.

Mr. Sosin’s hedge fund owned 744,491 World Acceptance Corporation (NASDAQ:WRLD) shares during this year’s second quarter that let it own a $99.77 million stake in the company. Insider Monkey’s Q2 2023 survey of 910 hedge funds outlined that 10 had held a stake in the company.

World Acceptance Corporation (NASDAQ:WRLD)’s largest investor in our database of 910 hedge funds is Clifford A. Sosin’s CAS Investment Partners. World Acceptance Corporation (NASDAQ:WRLD) has a ‘Moderate Sell’ rating from 0 buys, 1 hold, and 1 sell. The average target is $95.00, with a high of $131.00 and a low of $59.00. The target is -24.50% lower than the current price of $125.83.

2. At Home Group Inc. (NYSE:HOME)

Net Gains: 300%

Together with its subsidiaries, At Home Group Inc. (NYSE:HOME) owns and operates home decor superstores. Its product portfolio includes furniture, garden décor, home textiles, rugs, and well décor. CAS Investment Partners confirmed a 17.72% stake in the company worth $80.28 million in the third quarter of 2019.

The hedge fund held the stock until it was the subject of a proposed takeover of a private equity firm as parry of a 37-a-share deal that valued the company at $2.4 billion. The hedge fund opposed the deal, insisting it undervalued it as it grew at an impressive rate as strong housing demand fuelled demand for its home décor. CAS insisted a $70 a share price was a reasonable takeover price.

CAS Investment Partners’ June quarter of 2021 investment portfolio held 11.08 million At Home Group Inc. (NYSE:HOME) shares which were worth $408.14 million and constituted 17.36% of the portfolio. The deal closed in July 2021, and the company’s stock ceased trading. By the time the company became private, the share price had increased by more than 300% from when CAS investment Partners Acquired stakes.

1. Party City Holdco Inc. (NYSE:PRTY)

Net Gains: 800%

Party City Holdco Inc. (NYSE:PRTY) designs, manufactures, and sources party goods worldwide. Its core business revolves around offering paper and plastic tableware, metallic, and the latest balloons. The company also operates a specialty retail party supply stores, including franchise stores under the Party City and Halloween names.

CAS Investment Partners first bought stakes in Party City Holdco Inc. (NYSE:PRTY) in the third quarter of 2019. Sosin increased stakes in the company in 2021 by roughly $2.5 million, ending up controlling about 14% of the outstanding shares. The increase came as the company delivered net sales of $510 million, which also followed the divestiture of some businesses.

As 2022’s fourth quarter ended, CAS Investment Partners had owned 19.56 million Party City Holdco Inc. (NYSE:PRTY) shares which allowed it to own a $7.15 million stake in the company that represented 1.7% of its investment portfolio. By the time the investor exited, the stock had rallied by about 800%.

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