Saga Partners, an investment management firm, published its second-quarter 2022investor letter – a copy of which can be seen here. During the second quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 56.3% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 16.1%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio, is -7.3% net of fees compared to the S&P 500 Index of 86.8%. The annualized return since inception for the Saga Portfolio is -1.4% net of fees compared to the S&P 500’s 12.0%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Saga Partners mentioned Carvana Co. (NYSE:CVNA) and explained its insights for the company. Founded in 2012, Carvana Co. (NYSE:CVNA) is a Tempe, Arizona-based used car dealers company with a $6.5 billion market capitalization. Carvana Co. (NYSE:CVNA) delivered a -84.12% return since the beginning of the year, while its 12-month returns are down by -88.81%. The stock closed at $36.81 per share on September 13, 2022.
Here is what Saga Partners has to say about Carvana Co. (NYSE:CVNA) in its Q2 2022 investor letter:
“The Portfolio first bought Carvana in Q3’19. I wrote about the Carvana investment thesis last quarter so I will try to keep my comments brief, although it has been the largest stock price decline and biggest impact on our results year-to-date so it deserves some further discussion.
Looking out into the future it seems inevitable that more used cars will be bought and sold online. If we break down the ~40 million used cars that are sold each year, it seems probable that ~5-10 million of that total will be bought/sold online. In fact, one could argue a higher share given how much better the entire customer value proposition is in terms of selection, lower online retail cost structure at scale, and overall buying/selling convenience and experience. However, that would require addressing older and higher mileage cars and more off-lease vehicles.
E-commerce and much of the internet-related services have a winner-take-most type dynamic. Having the greatest selection and infrastructure provides a better customer value proposition, which drives more demand, enabling greater selection and infrastructure investment. There is typically little room for a number two player within the same vertical offering a similar service, especially if the leader has a strong head start…” (Click here to see the full text)
Photo by Dean Brierley on Unsplash
Our calculations show that Carvana Co. (NYSE:CVNA) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Carvana Co. (NYSE:CVNA) was in 47 hedge fund portfolios at the end of the second quarter of 2022, compared to 48 funds in the previous quarter. Carvana Co. (NYSE:CVNA) delivered a 75.96% return in the past 3 months.
In August 2022, we also shared another hedge fund’s views on Carvana Co. (NYSE:CVNA) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
