Value investor doubles stake in Group One Automotive amid stock drop
Greg Alexander increased his position in Group One Automotive to 300 million dollars as the stock fell over 50% from its high. The company is valued at six times expected earnings, well below its 20-year average.
Group One Automotive, a 3 billion dollar car dealership chain, saw its stock fall over 50% from its high a year ago due to rising interest rates and tariffs making cars unaffordable. Warnings from competitor AutoNation that customers are delaying repairs contributed to the decline. Greg Alexander, a value investor whom Warren Buffett reportedly said he would trust with his money, nearly doubled his position in the company to 300 million dollars, giving him over 15% ownership and a board seat. The company has repurchased nearly 30% of its own shares. Group One generates over 70% of its gross profit from financing, insurance, and service rather than vehicle sales, a segment that benefits from increasing repair complexity. The stock is currently valued at six times expected earnings, compared to a 20-year average of nearly 10. The company is also acquiring ten Atlanta dealerships for over 1 billion dollars. The stock is undervalued relative to its historical averages and the stability of its service revenue stream, presenting a value investing opportunity.