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Aptiv (APTV) Stock Reaps Benefits of a Strong Balance Sheet

Artisan Mid Cap Fund recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -11.55% for the quarter (investor class), outperforming their benchmark, the Russell Midcap Index which returned -27.07% in the same quarter. You should check out Artisan Mid Cap Fund’s top 5 stock picks which helped them beat the market by nearly 16 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Artisan Mid Cap Fund highlighted a few stocks and Aptiv Plc (NYSE:APTV) is one of them. Aptiv engages in the design, development, and manufacture of vehicle components. Year-to-date, APTV stock lost 30.7% and on May 8th it had a closing price of $68.15. Its market cap is of $16.8 billion. Here is what Artisan Mid Cap Fund said:

“Aptiv is a leading provider of safety, infotainment and electronic control components to the automotive market. We have long believed Aptiv is the strongest, best capitalized auto supplier with strong market share and technology that positions it well as computing, electronic and electric batteries become increasingly core components of new vehicles. That said, the global COVID-19 crisis has quickly made Aptiv the best house in a terrible neighborhood. In February, China experienced an ~80% YOY decline in car sales and a 35% decline was reported in the US in March. Further downside momentum in the US is expected in April, with some estimating up to a 60% YoY decline. Aptiv’s strong balance sheet offers protection other competitors may not enjoy, and we believe the long-term secular trend toward more electronics-rich vehicles is still ahead but trimmed our position given the recent supply chain disruptions and demand destruction from COVID-19.”

In Q4 2019, the number of bullish hedge fund positions on APTV stock increased by about 59% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with APTV’s growth potential.

Disclosure: None. This article is originally published at Insider Monkey.

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