In this article, we discuss the top 5 stocks to invest in according to John Smith Clark’s Southpoint Capital Advisors. If you want to read our detailed analysis of these stocks, go directly to the Top Stocks to Invest in According to John Smith Clark’s Southpoint Capital Advisors.
5. Lithia Motors, Inc. (NYSE: LAD)
Southpoint Capital Advisors’ Stake Value: $249 million
Percentage of Southpoint Capital Advisors’ 13F Portfolio: 4.31%
Number of Hedge Fund Holders: 63
Initiated in 1946, Lithia Motors, Inc. (NYSE: LAD) cements itself in 5th place on Insider Monkey’s list of top stocks to invest in according to John Smith Clark’s Southpoint Capital Advisors.
On August 31, Lithia Motors, Inc. (NYSE: LAD) announced a partnership with Pfaff Automotive Partners to increase its reach in Canada.
In Q2 2021, 63 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in the company worth $2.9 billion compared to the 40 hedge funds staking $2.3 billion in the first quarter.
In the Q3 2020 Investor Letter, Cartenna Capital highlighted a few stocks and Lithia Motors Inc (NYSE:LAD) is one of them. Here is what Cartenna Capital said:
“Another key winner during Q3 for the Fund was our long position in Lithia Motors Inc. (“LAD” or “Lithia”). LAD represented a compelling opportunity to own a best-in-class auto dealer at a significant discount and whose fundamental drivers including vehicle miles driven, new/used unit volumes and used pricing, were rapidly accelerating off April’s trough levels. Our thesis centered on three idiosyncratic advantages of Lithia over other auto dealers. First, Lithia’s geographic breakdown offered meaningful exposure to highly dense urban areas like the Tri-State Region (NYC) and coastal California cities, where we believed public transportation and ride sharing would lose share to private automobile transportation. Second, LAD’s rapidly growing used-car business (13.7% same-store sales in 2019) was positioned to disproportionately benefit the Company as 75% of Lithia’s used car inventory is 4+ years old. Used cars of this age are typically less commoditized, more recession resistant and generate higher margins. The third, and most compelling, idiosyncratic opportunity emerged as Lithia’s management revealed a new digital retail strategy. With this new Driveway.com platform, we immediately deemed Lithia to be the best positioned to address the entire vehicle ownership lifecycle in a digital world, take market share, and expand its multiple as new investors appreciated the omnichannel story. Further, Lithia’s new “50 and 50 Plan” outlines a path to achieve $50b1n of revenue and $50 of earnings per share by 2025 (2019: $12.9b1n revenue, $11.76 EPS). Even after a run to $227 per share in late September, LAD continues to offer a tremendous risk-reward profile.”
