Brian Jackelow‘s SAB Capital Management disclosed a new stake in Asbury Automotive Group, Inc. (NYSE:ABG). According to a new filing with the Securities and Exchange Commission, SAB Capital owns around 1.68 million shares of the company, which represent 5.7% of common stock. The stake is passive by nature and will diversify SAB Capital’s concentrated equity portfolio that consists of only 16 positions as of the end of June.
SAB Capital’s stake in Asbury Automotive Group, Inc. (NYSE:ABG) has been disclosed right after the fund disclosed a new position in another company, The Men’s Wearhouse, Inc. (NYSE:MW). SAB Capital currently holds around 2.45 million shares of the company, which represent around 5.1% of the company. Overall, SAB is mainly a passive fund, with an equity portfolio of around $1.8 billion spread across different sectors of economy with a slight orientation towards Services stocks. According to the latest 13F filing, SAB Capital is betting big on Hertz Global Holdings, Inc. (NYSE:HTZ), holding around 8.5 million shares. The investor added the company to its equity portfolio during the last quarter of 2013, following which the stock dropped by over 20% amid accounting problems. However, with activist investor Carl Icahn stepping up earlier this year, Hertz has a good chance of recovery. Moreover, Barry Rosenstein also recently significantly raised its activist position.
Asbury Automotive Group, Inc. (NYSE:ABG)’s stock returned around 22% since the beginning of the year and is up by almost 36% over the last year. At the end of last month, Stephen V. Raneri‘s LionEye Capital Management reported boosting its position in the company to 1.89 million shares from 1.02 million. LionEye owns 6.2% of the company and since the stake is activist by nature, the fund said that it might engage in discussions with the company regarding measures that could increase shareholder value. Ricky Sandler‘s Eminence Capital is also a shareholder of the company, holding around 2.12 million shares as of the end of the second quarter.
Insiders have been actively selling shares of the automotive retailer this year. In August, the president and CEO of Asbury Automotive Group, Inc. (NYSE:ABG) Craig Monaghan sold around 28,000 shares at prices ranging between $68.67 and $70.07.
Meanwhile, several days after SAB Capital initiated its position, which was October 14, according to the filing,Asbury Automotive Group, Inc. (NYSE:ABG) reported that its Board of Directors increased the stock repurchase program to $200 million. Moreover, recently the company has announced its financial results for the third quarter, posting net income of $1.08 per share, from $0.73 per share a year ago. The revenue also increased slightly by 8% on the year to $1.5 billion. However, the net income was slightly below the analyst expectations, who forecasted net income of $1.10 per share on revenue of $1.5 billion.
In this way, SAB Capital seems to be betting on a stock with solid stock price growth and strong financial results, which have come above the estimates over the last several quarters. With other funds also betting on the stock, Asbury Automotive Group, Inc. (NYSE:ABG) represents an interesting point for retail investors seeking to profit from piggybacking larger firms.