David Abrams (Trades, Portfolio), the leader of Abrams Capital Management, disclosed his equity portfolio for the first quarter of 2023 last month.
The former protégé of Seth Klarman (Trades, Portfolio) takes a fundamental, value-oriented approach to stock picking, investing in a fairly concentrated number of securities. His Boston-based firm seeks to identify long-term opportunities among a wide variety of asset types in both foreign and domestic markets. He also prefers companies in which the CEO has a significant stake, or where the executive’s salary is primarily stock-based.
Keeping these criteria in mind, 13F filings for the three months ended March 31 show the guru boosted his stake in Cantaloupe Inc. (CTLP, Financial) and reduced the Teva Pharmaceutical Industries Ltd. (TEVA, Financial), Meta Platforms Inc. (META, Financial) and Asbury Automotive Group Inc. (ABG, Financial) investments.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Cantaloupe
The investor increased the Cantaloupe (CTLP, Financial) stake by 132.36%, picking up 4.09 million shares. The transaction had an impact of 0.73% on the equity portfolio. The stock traded for an average price of $5.33 per share during the quarter.
Abrams now holds 7.18 million shares total, accounting for 1.29% of the equity portfolio. GuruFocus estimates he has gained 2.89% on the investment so far.
Previously known as USA Technologies Inc., the Malvern, Pennsylvania-based software company, which facilitates digital payments, has a $530.12 million market cap; its shares were trading around $7.31 on Friday with a price-book ratio of 3.32 and a price-sales ratio of 2.20.
The GF Value Line suggests the stock is modestly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 70 out of 100, the GF Score indicates the company has poor performance potential. While Cantaloupe received high ratings for value and momentum, financial strength was more moderate and the profitability and growth ranks were low.
Of the gurus invested in Cantaloupe, Abrams has the largest stake with 9.90% of its outstanding shares. David Nierenberg (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Paul Tudor Jones (Trades, Portfolio) also own the stock.
Teva Pharmaceutical
Abrams halved his Teva Pharmaceutical (TEVA, Financial) stake, selling 7.96 million shares. The transaction impacted the equity portfolio by -2.59%. Shares traded for an average price of $9.89 each during the quarter.
The guru now holds 7.96 million shares, which represent 2.23% of the equity portfolio. GuruFocus data shows he has lost an estimated 41.43% on the investment to date.
The Israeli pharmaceutical company, which specializes in generic drugs, has a market cap of $8.37 billion; its shares were trading around $7.31 on Friday with a price-book ratio of 1.07 and a price-sales ratio of 0.56.
According to the GF Value Line, the stock is modestly undervalued currently.
The company, however, has poor performance potential. With a GF Score of 64, Teva received a high momentum rank, middling marks for profitability, financial strength and value and a low growth rating.
With a 0.71% stake, Abrams is the company’s largest guru shareholder. Other top guru investors include Simons’ firm, Jeremy Grantham (Trades, Portfolio), Francisco Garcia Parames (Trades, Portfolio) and Jones.
Meta Platforms
The guru curbed the Meta Platforms (META, Financial) position by 1.14%, shedding 24,876 shares. The transaction’s impact on the equity portfolio was -0.11%. During the quarter, the stock traded for an average per-share price of $170.30.
Abrams now holds 2.15 million shares in total, occupying 14.42% of the equity portfolio as the second-largest position. GuruFocus found he has gained 92.49% on the investment thus far.
The social media company formerly known as Facebook, which is headquartered in Menlo Park, California, has a $679.66 billion market cap; its shares were trading around $265.21 on Friday with a price-earnings ratio of 32.90, a price-book ratio of 5.49 and a price-sales ratio of 6.02.
Based on the GF Value Line, the stock appears to be significantly undervalued currently.
Further, the GF Score of 96 means the company has high outperformance potential on the back of solid ranks for profitability, growth, financial strength and value as well as a more moderate momentum rating.
Philippe Laffont (Trades, Portfolio) is Meta’s largest guru shareholder with a 0.31% stake. The stock is also being held by Chase Coleman (Trades, Portfolio), Dodge & Cox, Chris Davis (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Grantham and many others.
Asbury Automotive
Abrams trimmed the Asbury Automotive (ABG, Financial) holding by 0.46%, selling 9,676 shares. The equity portfolio was impacted -0.06% by the transaction.
He now holds 2.11 million shares, which make up 14% of the equity portfolio as the third-largest position. GuruFocus says he has gained around 252.65% on the investment over its lifetime.
The operator of auto dealerships, which is based in Duluth, Georgia, has a $4.89 billion market cap; its shares were trading around $227.15 on Friday with a price-earnings ratio of 5.33, a price-book ratio of 1.62 and a price-sales ratio of 0.34.
The GF Value Line suggests the stock is fairly valued currently.
Asbury has high outperformance potential with a GF Score of 94. It recorded solid ratings for three of the criteria, though the financial strength and value ranks were more moderate.
Holding a 9.79% stake, Abrams has the largest guru shareholder of the company. Glenn Greenberg (Trades, Portfolio), Hotchkis & Wiley, Simons’ firm, Greenblatt, Ray Dalio (Trades, Portfolio)’s Bridgewater Associates and Steven Cohen (Trades, Portfolio) also have holdings in Asbury.
Portfolio composition
Abrams did not make any other changes to his holdings. As of March 31, his five largest positions are Lithia Motors Inc. (LAD, Financial), Meta Platforms, Asbury Automotive, TransDigm Group Inc. (TDG, Financial) and Alphabet Inc. (GOOGL, Financial).
Over 45% of the guru’s $3.16 billion equity portfolio, which is composed of 16 stocks, is invested in the consumer cyclical sector, followed by smaller exposures to the communication services and industrials spaces.
