The Market Maven - Week 20
Asbury Automotive, Triumph Financial, Raketech
Asbury Automotive 🇺🇸 (NYSE: ABG, EV: $7.5B, Last Close: $239.82)
Asbury Automotive (ABG) is one of the largest and best run auto retailers in the US. There are couple of things to like about car dealerships: They generate outsized gross profit from non-cyclical parts and services revenues, they operate localized mini-monopolies, and relationships with OEMs enable the roll-up of other franchises at attractive multiples.
Asbury has a durable ROE of 18.5% and retains all of their earnings, buying shares at the current earnings yield of 12% today should produce attractive returns going forward.
A recent VIC Writeup (Link)
Black Bear Value’s ABG Thesis (Link, pg. 5).
Bonhoeffer Makes The Case for Auto Dealers in Their Q1 2024 Letter (Link. pg. 5)
An excerpt from Bonhoeffer Capitals Q2 2024 letter.
Triumph Financial 🇺🇸 (NASDAQ: TFIN, MCap: $1.4B, Last Close: $62.44)
Triumph is a combination of a regional bank (low cost of funding) and a factoring company (high return on assets). Triumphs focus and expertise in the road freight factoring niche generates an average ROI of ~17%. Truckers prefer to get paid up front instead of 30 days. Triumph purchases these invoices at a 1-2% discount and turns them every ~36 days.
Triumph has also created a factoring payment network which is quickly dominating the industry, and has made a move to monetize it’s vast amount of factoring data.
Shares currently trade for ~10x normalized bank/factoring earnings which implies the market is assigning no value to Triumphs rapidly growing payments network and data business.
A Great Writeup on Triumph from Azagala Capital (Link, pg. 16).
An Interview with CEO Aaron Graft (Link).
Raketech Group Holding 🇺🇸 (STO: RAKE, EV: 375.4M SEK, Last Close: 2.92 SEK)
Raketech owns iGambling referral websites. If you google for best online betting sites, Raketech most likely owns the review/comparison site you end up visiting.
Over the last 5 years Raketech has brought in total CFO of €87.8M while spending €73.6M on acquiring and building sites. Today they trade for €12M, or 4x their average “net” cash flow of the last 5 years.
A Writeup from Spruce Hill Capital (Link).
Disclosure: This newsletter does not provide investment advice. Information presented is for informational purposes only and should not be considered a recommendation to buy or sell securities. The author may or may not own the securities discussed.