Is AutoNation (AN) a Smart Long-Term Buy?

Bonhoeffer Capital Management, an investment management firm, released its first quarter 2023 investor letter, a copy of which can be downloaded here. In its first quarter letter, the fund mentioned its main country exposures are South Korea, the United States, the United Kingdom, South Africa, the Philippines, and Latin America. Notably, the fund has significant industry exposures in telecom/media, real estate/infrastructure, and consumer products. The fund is targeting sectors within the chemicals, leasing, distributors, housing, and specialty finance sectors. Spare some time to check the fund’s top 5 holdings to know more about their top bets for 2023.

In its Q1 2023 investor letter, Bonhoeffer Capital Management mentioned AutoNation, Inc. (NYSE:AN) and explained its insights for the company. Founded in 1991, AutoNation, Inc. (NYSE:AN) is a Fort Lauderdale, Florida-based used car dealers company with a $7 billion market capitalization. AutoNation, Inc. (NYSE:AN) delivered a 43.72% return since the beginning of the year, while its 12-month returns are up by 31.85%. The stock closed at $154.61 per share on June 23, 2023.

Here is what Bonhoeffer Capital Management has to say about AutoNation, Inc. (NYSE:AN) in its Q1 2023 investor letter:

“AutoNation has followed an organic growth and buyback strategy versus a consolidation strategy. All of the firms have had a reduction in PE over the last 10 years. The question is: will these historical trends continue? There is a large TAM for continued consolidation, and given the PEs (6-8x earnings) today, buybacks will be accretive to all of these firms. I think the historical trends are intact and will continue into the future; thus, I am bullish on growth for the consolidation-focused automobile dealers.”

Our calculations show that AutoNation, Inc. (NYSE:AN) was not able to secure a spot on our list of the 30 Most Popular Stocks Among Hedge Funds. AutoNation, Inc. (NYSE:AN) was in 31 hedge fund portfolios at the end of the first quarter of 2023, compared to 34 funds in the previous quarter. AutoNation, Inc. (NYSE:AN) delivered a 21.02% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q1 2023 page.

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