Here’s Why Vulcan Value Partners Sold Credit Acceptance Corp. (CACC)

Vulcan Value Partners, an investment management firm, published its “Large Cap, Small Cap, Focus Composite, Focus Plus Composite, and All Cap” fourth quarter 2020 investor letter – a copy of which can be downloaded here. Vulcan’s Large Cap, Small Cap and All Cap strategies beat both their primary and secondary benchmarks, while Focus and Focus Plus trailed their primary benchmarks but beat their secondary benchmarks. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Vulcan Value Partners, in their Q4 2020 investor letter, mentioned Credit Acceptance Corporation (NASDAQ: CACC) and emphasized their views on the company. Credit Acceptance Corporation is a Southfield, Michigan-based auto finance company that currently has a $6.4 billion market capitalization. Since the beginning of the year, CACC delivered a 9.16% return, extending its 12-month gains to 47.78%. As of March 29, 2021, the stock closed at $377.90 per share.

Here is what Vulcan Value Partners has to say about Credit Acceptance Corporation in their Q4 2020 investor letter:

“We sold Credit Acceptance Corp. during the quarter. Recent news surrounding Credit Acceptance caused us to reevaluate the
company’s value. After quantifying the variables and possibilities, we determined its value was negatively impacted. While we believe there is still a margin of safety, that margin has been reduced, so we sold our position to reallocate capital into more discounted names.”

10 best cheap stocks to invest in February 2021

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Our calculations show that Credit Acceptance Corporation (NASDAQ: CACC) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Credit Acceptance Corporation was in 29 hedge fund portfolios. CACC delivered a decent 13.15% return in the past 3 months.