Should You Invest in KAR Auction Services (KAR) Now?

White Brook Capital Partners, an investment management firm, released its first-quarter investor letter. The same can be downloaded here. In the first quarter, the fund underperformed and was down 2.33% compared to the Midcap 400 Index’s 3.81% and the S&P 500 Index’s 7.49% returns. In January and February, the portfolio performed well, however, it suffered banking sector declines later. In addition, please check the fund’s top five holdings to know its best picks in 2023.

White Brook Capital highlighted stocks like KAR Auction Services, Inc. (NYSE:KAR) in the first quarter 2023 investor letter. Headquartered in Carmel, Indiana, KAR Auction Services, Inc. (NYSE:KAR) provides an online marketplace for used vehicles. On April 21, 2023, KAR Auction Services, Inc. (NYSE:KAR) stock closed at $13.59 per share. One-month return of KAR Auction Services, Inc. (NYSE:KAR) was 7.52%, and its shares lost 16.98% of their value over the last 52 weeks. KAR Auction Services, Inc. (NYSE:KAR) has a market capitalization of $1.484 billion.

White Brook Capital made the following comment about KAR Auction Services, Inc. (NYSE:KAR) in its Q1 2023 investor letter:

“KAR Auction Services, Inc. (NYSE:KAR): More constrained banks have resulted in higher yields for incumbent non-bank dealer floor plan financing companies. This should positively impact the ability of KAR, a very large dealer floorplan lender, to lend profitably at higher yields.

KAR’s loans are typically installment loans where the principal must be paid along with interest.  Higher yields on still-high used car prices should incentivize dealers to wholesale cars they cannot retail more quickly and to accept lower bids for those cars when they do try to wholesale them. This is a positive for the fundamentals of both company divisions that has gone largely unappreciated.”

Copyright: sonyae / 123RF Stock Photo

KAR Auction Services, Inc. (NYSE:KAR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held KAR Auction Services, Inc. (NYSE:KAR) at the end of the fourth quarter which was 13 in the previous quarter.

We discussed KAR Auction Services, Inc. (NYSE:KAR) in another article and shared White Brook Capital’s views on the company. In addition, please check out our hedge fund investor letters Q1 2023 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.