Q: So it's mostly independent operators?


A: The other 92% is mostly guys who own a few dealerships, so it is still very fragmented. When you look at the industry from the top down, you have AutoNation, which has about 2% of the U.S. market. It's been around for a long time. They've been able to acquire a lot of dealerships and generate economies of scale as far as its operations, and they've achieved some real cost savings above and beyond what these individual owner operators can realize. That gives AutoNation a real advantage in the market. Not in terms of buying vehicles -- each dealer is dealt with exactly the same way on pricing from the auto makers -- but on their operating costs. So they are very good operators, and they have been able, over the long term, to make acquisitions relatively inexpensively, to make those dealerships a lot more efficient, and to generate some real profits. And that's what all these other publicly traded dealerships are doing. AutoNation is almost fully mature at this point, and we don't expect them to make tons of acquisitions -- though we expect them to still make acquisitions opportunistically. Our price target is 23, compared with [the stock's] recent price of around 18.

car sales are down now, but AZO shows us that they won't be down forever.

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Consumer Stocks Are Down, But Not Out: Chris Guinther, portfolio manager of the RidgeWorth Small Cap Growth Stock fund, says don't count out consumer-based stocks like Dick's Sporting Goods, Life Time Fitness and AutoNation just yet.
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Hedge-fund billionaire Edward Lampert reported in a Form 4 that he was raising his direct ownership to about 12 million shares (6.8%), after buying 228,700 on Nov. 13 and 14 at an average of $6.06 a share.

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Billionaire investor Edward Lampert has raised his stake to about 71.25 million shares (39.9%) by buying approximately 2.1 million from May 16 to 28, at a total cost of $33.3 million.

Billionaire investor Edward Lampert raised his stake to about 69.13 million shares (38.7%). In open-market purchases from April 28 to May 9, Lampert, chairman of Sears Holding (SHLD), bought about 1.82 million shares, for an average price of $16.04 apiece.

Billionaire investor Edward Lampert raised his stake to 60,714,921 shares (33%), after buying 1,906,157 from Feb. 11 to 13 at prices ranging from $15.18 to $15.55 apiece.

Billionaire investor Edward Lampert raised his stake to 55.3 million shares (30%) by buying 2.87 million from Nov. 13 to 26 for an aggregate price of $47.57 million.

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