Odey Asset Management Buys More Lookers ~ market folly

Thursday, October 20, 2011

Odey Asset Management Buys More Lookers

Crispin Odey's UK-based hedge fund, Odey Asset Management, has added to its holdings of car dealer Lookers (LON: LOOK). Due to a filing made on October 13th, Odey now owns 5.19% of Lookers shares.

Odey has fancied UK car dealers for some time. In Crispin Odey's January 2010 letter for his flagship fund, Odey European, he said that he in particular liked London listed car dealers Pendragon and Lookers. Odey wrote,

"I have bought well managed businesses, where management have taken the necessary action to live in a world in which demand remains excessively weak. Where management have demonstrated the ability to take advantage of further dislocation –for instance if interest rates were to rise, they would be able to exploit this as an opportunity to buy their rivals.

In the UK this has put me into the likes of Lookers and Pendragon, both car dealers. Current new car sales are running at 1.8 million cars a year, some thirty percent below the replacement rate of 2.8 million cars. Money is being made in used car sales and servicing, both of which are benefitting from the ageing of the fleet. On a P/E for this year of 5x, I find shares that are on discount to a level of profitability which already discounts the worst. That double discount gives me a great deal of comfort.”

Odey Likes Pendragon Too

Since then, Lookers shares have traded more or less sideways whilst Pendragon shares have lost over half of their value. As Pendragon's shares fell in 2010 and 2011, Odey doubled-down, building a large ownership stake of 21.09% of the company. Odey's last purchase of Pendragon stock was in mid-August 2011.

Other Recent Activity

Odey also recently added to his holdings in London listed business services company RSM Tenon. You can also view Odey's latest market outlook.

About Lookers

Per Google Finance – “Lookers plc is a motor retail company. It is a multi-franchise main dealer group with franchises for many car manufacturers. It operates 122 retail outlets across 32 franchises operating from 73 locations. And was organized into two main business segments: motor division and parts distribution."

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