Black Bear Value Partners, an investment management firm, published its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -3.0% in June and -10.5% in the quarter, and -11.7% YTD. The S&P 500 returned +5.1% June, +10.9% in the quarter, and +6.2% year-to-date. HFRI Value Index returned +3.1% in June, +7.7% in the quarter, and +7.1% year-to-date. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second quarter 2025 investor letter, Black Bear Value Partners highlighted stocks such as AutoNation, Inc. (NYSE:AN). AutoNation, Inc. (NYSE:AN) is a US-based automotive retailer. One-month return of AutoNation, Inc. (NYSE:AN) was 12.53%, and its shares gained 18.09% of their value over the last 52 weeks. On July 14, 2025, AutoNation, Inc. (NYSE:AN) stock closed at $214.34 per share with a market capitalization of $8.081 billion.
Black Bear Value Partners stated the following regarding AutoNation, Inc. (NYSE:AN) in its second quarter 2025 investor letter:
“Asbury Group and AutoNation, Inc. (NYSE:AN) operate auto dealerships across the United States. The strength of the model comes from the back of the house in parts and services where more than 50% of the profits come from. Auto retailers are resilient businesses that generate strong free cash flow even in soft markets. ~90% of auto dealerships are privately owned providing a long-term runway for consolidation and growth. There are scale advantages to being a larger public dealer (access to capital for M&A, ability for strong parts/service business as cars become more complex, lower overhead costs, brand equity). The businesses are priced as if there will be no growth.
In the shorter term tariffs will increase the cost of an automobile (how much is hard to say), reducing the affordability for both new and used cars (holding all else equal). Some of this will be mitigated by a highly variable component in the wage expense. Some damage may also be mitigated by increased activity in the Parts & Service division. The impact of tariffs could take some time to be felt and its uncertain if there will be tax credits/interest deductibility to lessen the pain on American consumers.
AutoNation reported strong Q1 2025 results, with revenue climbing approximately 3% year-over-year driven by a 7–10% increase in same-store new vehicle sales. Gross profit increased about 2% including a record $568 million in after-sales profit as margins expanded by roughly 140 basis points. Used-vehicle profitability also surged: gross profit per unit rose about 13% to $1,662, and total used-vehicle profit jumped around 12% The Customer Financial Services arm grew ~5–6%, with improved per-unit returns. Capital deployment totaled ~$370 million, including $225 million in share repurchases (reducing shares by ~3%) and $70 million in two store acquisitions. Management highlighted resilient market dynamics, improved inventory efficiency (days’ supply down ~14%), and continued diversification across revenue streams—reinforcing confidence in AutoNation’s robust, multi-channel automotive retail model…” (Click here to read the full text)
An online automotive marketplace platform with a large selection of car listings.
AutoNation, Inc. (NYSE:AN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held AutoNation, Inc. (NYSE:AN) at the end of the first quarter, which was 43 in the previous quarter. While we acknowledge the risk and potential of AN 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 AN and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q2 2025 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.
