TEVJF - Tracking David Abrams' Abrams Capital Management Portfolio - Q4 2022 Update

Summary

• David Abrams’ 13F portfolio value decreased this quarter from $3.47B to $2.80B. The number of positions decreased from 18 to 15.
• The Meta Platforms stake was increased substantially while decreasing TransDigm Group, Energy Transfer, Alphabet, Willis Towers Watson, and Teva Pharmaceutical.
• The top three positions are Lithia Motors, Ashbury Automotive, and Meta Platforms. They add up to ~40% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to David Abrams’ 13F portfolio on a quarterly basis. It is based on Abrams’ regulatory 13F Form filed on 2/10/2023. Please visit our Tracking David Abrams’ Abrams Capital Management article for an idea on his investment philosophy and our last update for the fund's moves during Q3 2022.

This quarter, Abrams’ 13F portfolio value decreased from $3.47B to $2.80B. The number of holdings decreased from 18 to 15. The top three stakes are at ~40% of the 13F portfolio while the top five holdings are at ~56%.

Stake Disposals:

Change Healthcare: Change Healthcare was a large (top-three) 12.61% of the portfolio position established during the first three quarters of 2021 at prices between ~$18 and ~$24. UnitedHealth ( UNH ) acquired Change Healthcare in a $25.75 per share all-cash deal that closed last October.

Note: Abrams Capital Management had a ~5.4% ownership stake in Change Healthcare.

Kinder Morgan ( KMI ): KMI was a 1.62% of the portfolio position purchased in Q1 2018 at prices between $14.75 and $19.75. Q1 2020 saw a ~15% stake increase at prices between $10 and $22.25 and that was followed with a ~27% increase the next quarter at prices between $12.73 and $18. There was a ~73% reduction last quarter at prices between ~$16 and ~$19. The disposal this quarter was at prices between ~$16.50 and ~$19.15. The stock currently trades at $18.36.

O-I Glass ( OI ) previously Owens-Illinois: OI was a 2.59% of the portfolio stake established in Q4 2019 at prices between $8.50 and $12 and increased by ~42% the next quarter at prices between $4.64 and $15. The elimination this quarter was at prices between ~$13 and ~$17. The stock currently trades at $21.75.

Stake Increases:

Meta Platforms ( META ) previously Facebook: META is a large (top three) 9.34% portfolio position purchased in Q4 2018 at prices between $124 and $163. Q1 2020 saw a ~18% stake increase at prices between $146 and $223. This quarter saw another ~80% stake increase at prices between ~$89 and ~$140. The stock currently trades at ~$174.

Coupang Inc. ( CPNG ): The 6.44% CPNG stake was purchased in Q3 2021 at prices between ~$27 and ~$44.50. Next quarter saw a ~120% stake increase at prices between ~$25.50 and ~$30.50. That was followed with a ~40% stake increase in Q1 2022 at prices between ~$15.50 and ~$28.75. The stock is now near the low end of their purchase price ranges at $15.65. There was a marginal increase this quarter.

Stake Decreases:

TransDigm Group ( TDG ): The large (top five) 8.22% TDG position was purchased in Q1 2020 at prices between $246 and $658 and the stock currently trades at ~$731. There was a roughly one-third reduction this quarter at prices between ~$510 and ~$640.

U-Haul Holding Company ( UHAL ): UHAL is a ~8% position purchased in Q4 2016 at prices between $31 and $37 and increased by ~160% the following quarter at prices between $37 and $39. There was a ~45% increase in Q2 2017 at prices between $34 and $39 and that was followed with a similar increase in H1 2018 at prices between $32 and $38. Q4 2021 saw a ~20% reduction at prices between ~$65 and ~$76. There has been minor trimming since. The stock is now at ~$65.

Note: the prices quoted above are adjusted for the 10-for-1 stock-split last November.

Energy Transfer LP ( ET ): The 7.55% ET stake was established in Q1 2020 at prices between $4.55 and $13.75. There was a ~64% stake increase in Q3 2020 at prices between $5.40 and $7.15. The stock is now at $12.84. There was a ~20% selling this quarter at prices between ~$11 and ~$12.75.

Alphabet Inc. ( GOOG ): GOOG is a large 7.36% position purchased in Q2 2018 at prices between ~$50 and ~$59. There was a ~20% stake increase in Q1 2020 at prices between ~$53 and ~$76. This quarter saw a similar reduction at prices between ~$83.50 and ~$105. The stock is now at ~$95.

Willis Towers Watson plc ( WTW ): WTW is a large ~7% position purchased in Q1 2017 at prices between $117 and $133. Since then, the activity had been minor. This quarter saw a ~25% selling at prices between ~$201 and ~$248. The stock is now at ~$245.

Teva Pharmaceutical ( TEVA ): TEVA is a 5.18% of the portfolio stake established in Q3 2017 at prices between $15.50 and $33.50. Q3 2019 saw a one-third stake increase at prices between $6 and $9.60. The stock currently trades at $10.26. This quarter saw a one-third reduction at prices between ~$8 and ~$9.50.

USCB Financial Holdings ( USCB ): USCB is a minutely small 0.28% portfolio position established in Q3 2021. The stake saw a ~23% selling this quarter.

Kept Steady:

Lithia Motors ( LAD ): LAD is currently the largest position at ~17% of the portfolio. It was established in Q2 2018 at prices between $95 and $105 and almost doubled the next quarter at prices between $81 and $99. There have been minor increases since. The stock is now at ~$274.

Note: Their ownership stake in Lithia Motors is at ~9%.

Asbury Automotive ( ABG ): ABG is a top-three 13.54% position established in Q3 2017 at prices between $50 and $62 and increased by ~45% in Q3 2018 at prices between $67 and $77.50. The next quarter saw another 20% stake increase at prices between $59 and $72. Q1 2020 also saw a ~11% stake increase at an average cost in the high 40s. The stock currently trades at ~$232.

Note: Their ownership stake in the business is ~9%.

Tempur Sealy International ( TPX ): TPX is a 4.41% of the portfolio stake established in Q3 2021 at prices between ~$37.50 and ~$49.60 and the stock currently trades at $40.92.

Camping World Holdings ( CWH ): CWH is a ~4% position purchased in Q3 2018 at prices between $19 and $27 and increased by two-thirds next quarter at prices between $11.25 and $22.50. Q2 2019 saw a ~30% stake increase at prices between $11 and $13 per share. Q4 2019 also saw a ~12% stake increase at ~$7.90 per share while in Q3 2020 there was similar selling at ~$37.50. The stock is now at ~$25. They control ~12% of the business.

Cantaloupe Inc. ( CTLP ) previously USA Technologies: The very small 0.48% CTLP position was purchased in Q1 2021 at prices between ~$9.45 and ~$12.45 and it is now well below that range at ~$5. Q1 2022 saw a ~50% stake increase at prices between ~$6.50 and ~$8.75.

Nuvation Bio ( NUVB ): Panacea Acquisition merged with Nuvation Bio in a de-SPAC transaction that closed in February 2021. The stake was established during that quarter when it traded between ~$9 and ~$14.60. It currently trades at $2.09, and the stake is at 0.26% of the portfolio.

The spreadsheet below highlights changes to Abrams’ 13F stock holdings in Q4 2022:

Source: John Vincent. Data constructed from Abrams Capital Management’s 13F filings for Q3 2022 and Q4 2022.

For further details see: