In June 2018 David Abrams owned 457,301 shares of Group 1 Automotive. Three months later he owned none. He did not leave the car business. In those same three months he doubled his Lithia Motors, from one million shares to two million.
Eight years later Greg Alexander held the same two stocks. This year he sold every share of Lithia and kept buying Group 1 until he owned 16% of the company.
I own Group 1. So one of these men threw out my stock, and the other bet a sixth of a company on it. I wanted to know who they are before I asked who is right.
Abrams spent ten years at Baupost, next to Seth Klarman, before he started his own firm in 1999. He gives a talk at Columbia every few years and otherwise says nothing. He has owned Lithia for eight years and trimmed it once, in 2019, by 73,932 shares.
Greg Alexander is harder to find. He runs a strategy called Acacia and has run it since June 1996. The firm behind it is Ruane Cunniff. If that name means nothing to you, Sequoia Fund will. Bill Ruane sat next to Warren Buffett in Ben Graham’s class at Columbia. When Buffett closed his partnership in 1969 and sent his investors away, he told them to go to Ruane. Greg has spent forty years inside that house. He gives no interviews and writes no public letters.
So this is not two hedge fund guys. One comes out of Klarman’s shop. The other comes out of Buffett’s.
Both of them have known these two car dealers for years. Greg owned Lithia and Group 1 side by side for at least three and a half years before he picked one. Abrams owned both for years before he picked the other.
And yesterday the market gave its own opinion on one of them. Lithia reported its third quarter, beat the estimate, opened up 6% and closed down 10%.
Abrams made his choice eight years ago, so his trade has a result. I worked it out from his own filings and it surprised me. Greg’s trade has a contract. I read all of it. One line in it names a company that nobody writing about this trade has mentioned, and it is not in America.
Then the duel. Both companies, today’s prices, one picture, and which one I think is the better bet for your money.
