Asbury Automotive: Well-Run, High-ROE Local Monopoly Businesses

Javier López Bernardo of BrightGate Capital presented his in-depth investment thesis on Asbury Automotive Group (US: ABG) at Best Ideas 2025.

Thesis summary:

Asbury Automotive is a US automotive dealer with over 160 locations. Auto dealerships are known for their solid and stable business model, as their profitability comes primarily from maintenance and repair services, as well as acting as an intermediary in the sale of financing and insurance, both of which are capital-light businesses.

Dealers in the US benefit from the legal protection of “franchise laws” that limit competition in their territories, effectively creating local monopolies. As a large group, Asbury benefits from economies of scale mainly from logistics and advertising. The management is regarded as strong and savvy operators.

Market fears over fleet electrification appear overdone, as while repair volumes may decline, the average repair value is expected to increase due to the increasing complexity of vehicles.

As a result of these misplaced fears, Asbury’s valuation is one of the most attractive in the US mid-cap space, as it has strong historical metrics (15% RNOA and 34% ROE) while trading at 1.5 times book value, so Javier expects annual shareholder returns of 15-20% over the next few years.

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About the instructor:

Javier López Bernardo is Portfolio Manager (equities and high yield) at BrightGate Capital SGIIC, an independent asset management boutique company based in Madrid, Spain. He holds a Bachelor in Business Administration (major in finance) from the Universidad Complutense de Madrid, a Master in Corporate Finance and Investment Banking from the IEB and a Master in Economics from Kingston University, where he also earned a Ph.D. in Economics. His academic research on equity markets and growth theory has been published in leading international journals. He is a CFA Charterholder and was a two-year full scholarship recipient of the Ramón Areces Foundation. He is a lecturer for the CFA programme and also at the Advantere School of Management, where he teaches asset management and behavioural finance.