In a recently released Tao Value’s Q1 2019 Investor Letter, the fund disclosed its quarterly return of 14.03% beating the MSCI All Country World Index (ACWI) that delivered 12.45% in the first three months of 2019. If you are interested you can download a copy of its letter here. In the letter, Tao Value also discussed several position in its portfolio, including the biggest ones, among which was Credit Acceptance Corporation (NASDAQ:CACC).
As of the end of Q1 2019, our top 3 positions are Credit Acceptance (ticker: CACC), Cash, and Alphabet (ticker: GOOG). Collectively, they are 36% of the portfolio.
CACC reported Q4 results of 5.9% unit volume growth and 12.4% dollar volume growth, which are softer than Q3 yet still impressive. There was similar issue in average unit volume per dealer, which decreased by 6.1%. The main reason appears to be the new signed dealers had much lower average volume, which was 5.7 in Q4 2018 compared to that of existing dealers at 11.7. It is yet to be seen whether it is just a ramping up issue or difference in dealers’ quality.
Credit Acceptance Corporation is a $9.22 billion market cap auto finance company offering car loans and related services. Over the past 12 months, its stock gained 22.75%, and on April 24th it had a closing price of $486.97. The stock is trading at a price-to-earnings ratio of 16.57.
Heading into the first quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CACC over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Abrams Bison Investments held the most valuable stake in Credit Acceptance Corp. (NASDAQ:CACC), which was worth $248.4 million at the end of the third quarter. On the second spot was BloombergSen which amassed $174.5 million worth of shares. Moreover, Cantillon Capital Management, Gobi Capital, and Hound Partners were also bullish on Credit Acceptance Corp. (NASDAQ:CACC), allocating a large percentage of their portfolios to this stock.
This article is originally published at Insider Monkey.