Here's Black Bear Value Partners' Comments on Asbury Automotive Group (ABG)

Black Bear Value Partners, an investment management firm, published its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -3.0% in June and -10.5% in the quarter, and -11.7% YTD. The S&P 500 returned +5.1% June, +10.9% in the quarter, and +6.2% year-to-date. HFRI Value Index returned +3.1% in June, +7.7% in the quarter, and +7.1% year-to-date. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Black Bear Value Partners highlighted stocks such as Asbury Automotive Group, Inc. (NYSE:ABG). Headquartered in Duluth, Georgia, Asbury Automotive Group, Inc. (NYSE:ABG) is an automotive retailer. The one-month return of Asbury Automotive Group, Inc. (NYSE:ABG) was 12.06%, and its shares gained 1.43% of their value over the last 52 weeks. On July 14, 2025, Asbury Automotive Group, Inc. (NYSE:ABG) stock closed at $263.32 per share with a market capitalization of $5.177 billion.

Black Bear Value Partners stated the following regarding Asbury Automotive Group, Inc. (NYSE:ABG) in its second quarter 2025 investor letter:

"Asbury Automotive Group, Inc. (NYSE:ABG) and AutoNation operate auto dealerships across the United States. The strength of the model comes from the back of the house in parts and services where more than 50% of the profits come from. Auto retailers are resilient businesses that generate strong free cash flow even in soft markets. ~90% of auto dealerships are privately owned providing a long-term runway for consolidation and growth. There are scale advantages to being a larger public dealer (access to capital for M&A, ability for strong parts/service business as cars become more complex, lower overhead costs, brand equity). The businesses are priced as if there will be no growth.

In the shorter term tariffs will increase the cost of an automobile (how much is hard to say), reducing the affordability for both new and used cars (holding all else equal). Some of this will be mitigated by a highly variable component in the wage expense. Some damage may also be mitigated by increased activity in the Parts & Service division. The impact of tariffs could take some time to be felt and its uncertain if there will be tax credits/interest deductibility to lessen the pain on American consumers.

Asbury Automotive Group reported a solid, though slightly softened, financial performance in Q1 2025. Revenue declined ~1% year-over-year, with gross profit decreasing 3%. Parts & service remained a bright spot, delivering a same-store gross profit increase of ~5%, driven by strong customer-pay demand (Parts & Service). Management noted resilience amid tariff uncertainty and weather disruptions and reaffirmed its pending acquisition of Herb Chambers Automotive Group, expected to close by mid-2025” (Click here to read the full text)

Asbury Automotive Group, Inc. (NYSE:ABG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Asbury Automotive Group, Inc. (NYSE:ABG) at the end of the first quarter, which was 32 in the previous quarter. While we acknowledge the potential of ABG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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