We recently published a list of Top 10 Stocks to Buy According to SRS Investment Management. In this article, we are going to take a look at where Avis Budget Group, Inc. (NASDAQ:CAR) stands against other top stocks to buy according to SRS Investment Management.
SRS Investment Management is a New York-based investment firm founded in 2006 by Karthik Sarma. The firm focuses on diverse investments across industries, including technology, media, telecommunications, consumer goods, and industrial sectors. It employs a research-driven approach to identify promising opportunities in global markets, leveraging its expertise to navigate complex financial landscapes.
As an investment advisory firm, SRS provides detailed insights into its business practices through its regulatory disclosures, although these are not verified by the SEC or state securities authorities. The firm emphasizes thorough due diligence when evaluating potential investments, gathering information on a company’s products, services, and market position. Its analytical approach includes engaging with industry experts, assessing supply and demand dynamics, and constructing financial models to project future performance and returns.
SRS primarily follows a global long/short equity strategy, aiming for high risk-adjusted returns while prioritizing capital preservation. The firm diversifies its investments across multiple industries and regions to mitigate risks. Its investment process involves extensive fundamental research, disciplined portfolio management, and strategic positioning in both long and short positions. This approach enables SRS to capitalize on market inefficiencies and generate sustainable returns.
Additionally, the firm runs a Focused Investment Program, targeting undervalued securities and acquiring significant positions at favorable prices. This strategy relies on active shareholder engagement, where SRS seeks positive responses from company management and stakeholders to influence corporate actions. The effectiveness of this strategy depends on how the market reacts to these initiatives and the willingness of companies to adopt changes proposed by shareholders. Through its meticulous investment approach, SRS aims to drive long-term value creation for its investors.
Karthik Sarma is an Indian billionaire hedge fund manager and the founder of SRS Investment Management, which he launched in 2006 after five years at Tiger Global Management. With a strong background in finance and investment, Sarma has also served as a director on Avis’s board since 2020, playing a key role in its strategic decisions. His educational background includes a bachelor’s degree from the Indian Institute of Technology Madras and a master’s degree from Princeton University. His professional journey began with three years at McKinsey & Co. as a consultant, where he gained experience in business strategy and financial analysis. He later joined Tiger Global Management, where he worked as a Managing Director from 2001 to 2005, honing his expertise in hedge fund management before establishing SRS Investment Management. Sarma’s ability to identify and capitalize on investment opportunities has positioned him as a highly influential figure in the hedge fund industry.
As an immigrant who moved to the United States for graduate studies, Sarma has built a reputation as a strategic investor with a disciplined approach to fund management. His experience across consulting, investment management, and corporate governance has contributed to his firm’s success. Through SRS, he continues to influence the financial landscape, focusing on long-term value creation for investors while maintaining a strong presence in key industries.
As of its latest filing for the fourth quarter of 2024, SRS Investment Management reported overseeing approximately $7 billion in 13F securities. The firm’s investment approach remains highly concentrated, with its top ten holdings accounting for 92.05% of total assets. This level of concentration suggests a high-conviction strategy, where SRS invests heavily in a select group of companies it believes offer strong long-term growth potential.
Our Methodology
The stocks discussed below were picked from SRS Investment Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close up shot of a family loading their luggage into a car rental vehicle.
Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Fund Holders as of Q4: 35
SRS Investment Management’s Equity Stake: $1.38 Billion
Avis Budget Group, Inc. (NASDAQ:CAR) is the parent company of major car rental brands like Avis, Budget, Zipcar, and Payless. The company reported a significant fourth-quarter loss, missing analyst expectations for both earnings and revenue. Avis posted a net loss of nearly $2 billion for the quarter, with an adjusted loss per share of $55.66, far below the expected -$1.02. Revenue came in at $2.71 billion, slightly under the forecasted $2.73 billion. Following the earnings announcement, the company’s stock declined by 1.6%.
The massive loss was primarily due to the company’s strategic decision to accelerate fleet rotations within its Americas segment. This move resulted in a one-time non-cash impairment charge of $2.3 billion, along with other non-cash-related charges totaling $180 million. Despite these financial setbacks, CEO Joe Ferraro remains optimistic, citing strong travel demand and emphasizing the company’s ability to generate at least $1 billion in adjusted EBITDA for 2025.
In a leadership shift, Avis Budget Group, Inc. (NASDAQ:CAR) announced that Ferraro will step down as CEO and transition into a Board Advisor role on June 30, 2025, concluding his 45-year tenure with the company. Brian Choi, currently serving as Chief Transformation Officer, will assume the CEO position on July 1, 2025. This transition marks a new phase for the company as it looks to navigate future market conditions and improve financial performance.
For the full year 2024, Avis Budget Group, Inc. (NASDAQ:CAR) reported total revenues of $11.8 billion but recorded a net loss of $1.8 billion. The company’s liquidity position remained strong at approximately $1.1 billion in cash and marketable securities, with an additional $2.8 billion in fleet funding capacity. Moving forward, Avis Budget Group aims to leverage its strong brand positioning and sustained travel demand to drive long-term profitability.
Despite the significant one-time impairment charges impacting short-term financials, Avis Budget Group, Inc. (NASDAQ:CAR) remains a strong investment opportunity due to its solid revenue growth, strong liquidity position, and continued demand for travel services, making it a top stock to buy according to SRS Investment Management.
Overall, CAR ranks 2nd on our list of top stocks to buy according to SRS Investment Management. While we acknowledge the potential for CAR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CAR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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