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Glenview Capital builds up position in Lithia Motors

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Glenview and Lithia Motors

In December 2014, Larry Robbins’s hedge fund Glenview Capital increased its position in Lithia Motors (LAD). According to Glenview’s 13G filing, the fund bought ~237,000 shares, bringing its position to 1.4 million shares in Lithia Motors (LAD). Currently, the group has a stake of 5.9% of LAD’s outstanding shares.

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Business overview

Lithia Motors is the eighth largest auto retailer in the US. The company offers 30 brands of new vehicles and a wide variety of used vehicles across the country and on its website. In addition to selling new and used cars, Lithia also provides replacement parts, maintenance, warranty, paint and repair services, financing, and insurance.

The company has 102 dealerships under the Lithia banner spread across the Western and Midwestern regions of the US. With the acquisition of DCH Auto Group, Lithia expanded its geographical footprint to Southern California, New Jersey, and New York by gaining access to 27 dealerships.

Lithia and its competitors

Lithia targets mid-sized regional markets for domestic and imported vehicles. This strategy protects the company from losing its market share to leading players in the US auto retail industry, including AutoNation (AN), Sonic Automotive (SAH), Group 1 Automotive (GPI), and Asbury Automotive Group (ABG).

Other major competitors include CarMax (KMX), Penske Automotive (PAG), and the privately owned Van Tuyl Group, which recently entered into an acquisition agreement with Berkshire Hathaway to become Berkshire Hathaway Automotive. The acquisition of DCH Auto Group presents Lithia with greater opportunities in metropolitan areas.

In the next part of this series, we’ll take a look at the new vehicle market in the US.

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