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Why Avis Budget Group (CAR) Stock is a Compelling Investment Case

Mittleman Brothers recently released its Q2 2020 Investor Letter, a copy of which you can download here. The Mittleman Global Value Equity Fund – Class P advanced 13.0% net of fees (AUD) in the second quarter of 2020, versus a gain of 6.0% in the MSCI ACW Index. You should check out Mittleman Brothers’ top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Mittleman Brothers’ highlighted a few stocks and Avis Budget Group Inc. (NASDAQ:CAR) is one of them. Avis Budget Group Inc. (NASDAQ:CAR) is a car rental company. Year-to-date, Avis Budget Group Inc. (NASDAQ:CAR) stock gained 2.3% and on August 20th it had a closing price of $32.98. Here is what Mittleman Brothers’ said:

“MIM’s second best performer in Q2 was Avis Budget Group (CAR). The position was initiated at a 2.5% portfolio weighting at an average cost of $11.71 in early April. The stock traded for just over $35 in early June. The business is volatile, but investors do not seem to appreciate how quickly Avis Budget can de-fleet in a slow-down, drawing capital (fleet equity) out as needed until demand picks up again. Airlines cannot do that, nor can hotels or cruise lines. MIM estimates Avis Budget is worth $40, which would be 8x EBITDA of $800M (normalised) and 10x FCF of $300M.”

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In Q1 2020, the number of bullish hedge fund positions on Avis Budget Group Inc. (NASDAQ:CAR) stock decreased by about 15% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with CAR’s upside potential. Our calculations showed that Avis Budget Group Inc. (NASDAQ:CAR) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.