Black Bear Value Partners, an investment management firm, published its first quarter 2024 investor letter, a copy of which can be downloaded here. Black Bear Value Fund returned +3.4% in March and is up +4.6% YTD and the S&P 500 returned +3.2% in March and +10.6% YTD. HFRI Value Index returned +2.9% in March and +4.6 YTD. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Black Bear Value Partners featured stocks Penske Automotive Group, Inc. (NYSE:PAG) in the first quarter 2024 investor letter. Headquartered in Bloomfield Hills, Michigan, Penske Automotive Group, Inc. (NYSE:PAG) is a diversified transportation services company. On April 9, 2024, Penske Automotive Group, Inc. (NYSE:PAG) stock closed at $154.42 per share. One-month return of Penske Automotive Group, Inc. (NYSE:PAG) was 0.11%, and its shares gained 10.30% of their value over the last 52 weeks. Penske Automotive Group, Inc. (NYSE:PAG) has a market capitalization of $10.353 billion.
Black Bear Value Partners stated the following regarding Penske Automotive Group, Inc. (NYSE:PAG) in its first quarter 2024 investor letter:
“We have owned AutoNation and Penske Automotive Group, Inc. (NYSE:PAG) in the past but decided to consolidate our auto dealer investments solely into Asbury Automotive (ABG). AutoNation had gone thought a management transition and I wanted to see how the new team managed the business. They have done an excellent job and exceeded my expectations when it comes to capital allocation. As the stock looked very cheap, they bought 62% of the company coming out of COVID. As far as Penske is concerned, I think I made a mistake selling it as I undervalued a “hidden” asset in the Company that became more obvious over time. Asbury has taken on acquisitions and while the Company has done a good job, I would prefer to see how they manage the integration from the sidelines. We appreciate their stewardship and would consider buying back the stock later.
Penske is unique in that in addition to their domestic car dealerships they also own: auto dealerships in the UK, leading truck dealerships in the US, and ~29% of Penske Truck Solutions (PTS) a logistics/truck rental business (aka “the hidden asset”). The truck dealerships have always captured my attention as Parts/Service are an even larger chunk of the business than in autos (65-70% of profits for trucks). This is a very sticky, high-margin business that would trade at far higher multiples as a standalone entity. For accounting reasons, PTS is accounted for using the equity method which means their share of income comes below the operating income line and is often ignored or misvalued. Their share of PTS is conservatively worth $2.5-$3.5BB or 22-32% of the market cap of the entire company. The quality of PAG is not properly reflected in the share price. Management owns a lot of stock and seems to agree as the Company has bought back 17% of the Company in the last 2 years at attractive prices.”
A wide view of a large auto dealership, its showroom packed with different types of cars.
Penske Automotive Group, Inc. (NYSE:PAG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Penske Automotive Group, Inc. (NYSE:PAG) was held by 21 hedge fund portfolios, compared to 18 in the previous quarter, according to our database.
We discussed Penske Automotive Group, Inc. (NYSE:PAG) in another article and shared the list of undervalued stocks picked by Billionaire Gabelli. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
