“We believe that Advance can achieve a share price of more than $350 by implementing a comprehensive margin improvement program, together with additional value creation opportunities, including substantial working capital improvements, realizing the value of Worldpac, and implementing a daily delivery program to drive commercial sales. Moreover, if Advance realizes margins and multiples in line with O’Reilly, which we believe is achievable, its stock could be worth well over $400,” Starboard said.
“We believe Advance’s tremendous operational improvement opportunity, combined with its discounted trading multiple, makes Advance an extremely compelling investment opportunity, and therefore have chosen to discuss Advance at the conference. Since the conference materials will be public, but may not be widely disseminated, we have included them as an attachment to this letter, so that you and the Board, as well as all shareholders of the Company, can understand our view of this compelling opportunity for Advance,” the investor added.
Now, let’s take a look at the latest action encompassing Advance Auto Parts, Inc. (NYSE:AAP).
How have hedgies been trading Advance Auto Parts, Inc. (NYSE:AAP)?
At Q4’s end, a total of 56 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Starboard Value holds the most valuable position in Advance Auto Parts, Inc. (NYSE:AAP). Starboard Value LP has a $257 million position in the stock, comprising 6.9% of its 13F portfolio. Coming in second is Point72 Asset Management, led by Steve Cohen, holding a $218.9 million position; the fund has 1.8% of its 13F portfolio invested in the stock and it initiated a position during the fourth quarter. Some other peers that are bullish comprise Jeffrey Tannenbaum’s Fir Tree, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.