Asbury Automotive Group (ABG): A Billionaire’s Long Game in Automotive Retail

Asbury Automotive Group (NYSE: ABG) has emerged as a cornerstone of billionaire David Abrams’ investment portfolio, reflecting his contrarian, long-term value strategy. With a 10.76% ownership stake in the company—held since 2017—and a third-place ranking in his $6.22 billion portfolio, ABG exemplifies Abrams’ focus on undervalued assets with durable competitive advantages. But why has this automotive retailer captured the attention of one of Wall Street’s most astute value investors? Let’s dive into the data and dissect ABG’s potential.

The Financial Engine: Resilience Amid Headwinds

Asbury’s Q3 2024 results underscore its operational strength. Revenue surged 16% year-over-year to $4.2 billion, driven by robust used-car sales and parts/service revenue. Adjusted earnings per share (EPS) reached $6.35, though supply-chain disruptions—such as Toyota’s stop-sale orders and Hurricane Helene—trimmed EPS by $0.40. Despite these challenges, Asbury executed a $89 million share buyback, repurchasing 400,000 shares in the quarter. This move aligns with Abrams’ preference for companies that return capital to shareholders during favorable conditions.

A Strategic Play for Growth: The Herb Chambers Acquisition

In February 2025, Asbury announced its $1.34 billion acquisition of Herb Chambers Companies, a major U.S. dealership group. This move expands ABG’s footprint to 50 states, adding 68 new franchises and over $3 billion in annual revenue. The deal, expected to close by late 2025, positions Asbury as the 6th-largest U.S. new-car retailer by sales volume. For Abrams, this acquisition signals Asbury’s ambition to capitalize on industry consolidation, a trend that could boost its market share and economies of scale.

Analyst Optimism: A 31.8% Upside?

Analysts project a $289.00 one-year price target for ABG—a 31.8% premium to its April 2025 price of $219.27—driven by:
- Strong 2025 revenue growth: Estimates of $33.28 billion (+93.6% from 2024).
- Margin expansion: Used-car profits are rebounding, while parts/service revenue hit a record $343 million in Q1 2025.
- Share buybacks: Asbury’s $89 million repurchase in Q3 2024 and plans for further buybacks could reduce shares outstanding, lifting EPS.

Abrams’ Playbook: Why Hold for Over a Decade?

Abrams’ 10-year holding period—averaging a $60.72 buy price—contrasts sharply with short-term traders. His rationale is clear:
1. Sector dominance: Asbury’s 277,016 annual used-car transactions and 150 dealerships create a moat against competitors.
2. Resilient cash flows: Even in 2023’s challenging auto market, Asbury generated $964 million in liquidity, ensuring flexibility.
3. Alignment with value principles: ABG trades at 6.8x forward earnings—a discount to peers like AutoNation (AN, 10.2x)—despite its growth trajectory.

Risks on the Horizon

No investment is without risks. Asbury faces:
- Supply-chain volatility: Chip shortages and automaker production cuts could disrupt new-car sales.
- Interest rate sensitivity: Higher borrowing costs could crimp consumer demand for financed vehicles.
- Integration risks: The Herb Chambers deal requires seamless cultural and operational alignment.

Conclusion: A Steady Hand in a Turbulent Market

Asbury Automotive Group’s blend of scale, cash flow, and strategic moves makes it a compelling pick for patient investors like David Abrams. With a $272 million gain per share since Abrams’ initial purchase and analyst targets signaling further upside, ABG’s fundamentals align with Abrams’ “buy-and-hold” philosophy.

While risks exist, Asbury’s institutional backing—30 hedge funds hold $1.44 billion in shares—and its role as a $33 billion revenue juggernaut suggest it’s no flash in the pan. For investors seeking stability in automotive retail, ABG’s mix of value and growth makes it a top-tier pick—even in an AI-dominated market.

Final Take: Asbury Automotive Group (ABG) is a rare gem in Abrams’ portfolio: a 10-year compounder with a $289 price target and a balance sheet ready to weather any storm. Whether you’re a value investor or a growth chaser, this is a stock worth watching.