Does Asbury Automotive Group, Inc. (NYSE:ABG) still have some upside potential? Stephen V. Raneri, the manager of LionEye Capital Management, seems to think so, having again boosted his investment in the company. As reported in a 13D filing with the Securities and Exchange Commission, the fund now holds roughly 2.58 million shares of the company, which account for 9.7% of its outstanding common stock. According to LionEye Capital’s latest 13F filing, the fund also held 175,200 shares underlying call options as of March 31. The fund previously held 2.33 million shares of Asbury Automotive Group, Inc. (NYSE:ABG) according to its previous 13D filing, submitted on May 5.
An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Visium can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 66 percentage points and returning over 123%, while hedge funds themselves have collectively underperformed the market (read the details here).
Asbury Automotive Group, Inc. (NYSE:ABG) is a US automotive retailer that provides a wide range of services, including vehicle sales and maintenance, insurance, and services contracts. Financially, the company has been thriving in the recent past, reporting revenues of $1.69 billion, up 12% year-over-year, and earnings per share of $1.52 for the second quarter of 2015. The stock has followed suit and appreciated by 11.5% so far this year. Asbury’s good financial performance has paved the way for high expectations for the third quarter of 2015, with analysts expecting $1.66 billion in revenues and $1.43 in earnings per share. Among the hedge funds we track, Glenn Fuhrman and John Phelan, the managers of MSD Capital, held the biggest investment in Asbury Automotive Group, Inc. (NYSE:ABG) as of March 31, holding 2.22 million shares (which LionEye has since surpassed). Ricky Sandler of Eminence Capital is also a fan of this company, having boosted his stake by 11% during the first quarter to 1.94 million shares.