Value Investor Clifford Sosin, founder and manager of CAS Investment Partners, runs a concentrated portfolio — as of Q2’s close the fund held only five positions. However, an equal-weighted portfolio of those five stocks is up 80% Year-to-date. The fund’s top holding, online car retailer Carvana (CVNA), is up 110% YTD. Sosin recently increased stakes in two of his fund’s other holdings.
In Form 4s filed over the last week, Sosin disclosed buying nearly $20M of Cardlytics (CDLX), increasing CAS’s position by 7.7%. Sosin’s fund is the company’s largest shareholder, with a 15.83% stake. CAS first showed a position in CDLX in Q1 of 2019 at around $20. The stock closed at $75.08 on Wednesday up 178% from March lows.
Cardlytics is a “purchase intelligence” software maker that helps banks create cash-back offers for customers on their websites and apps.
Value Investor Clifford Sosin also disclosed in Form 4 filings on Aug. 7 and Aug. 11 buying nearly $1M of Party City Holdco (PRTY) at an average price of $1.71. PRTY, a manufacturer and retailer of party supplies, has been hit hard by the Covid pandemic. The shares traded at $7.06 on Oct. 24 of 2019. However, the company has been a victim of the decline in mall shopping and its over leveraged balance sheet. The shares collapsed to $0.26 on March 18. CAS reported buying 2.07M shares at $0.50 in a 13G/A filed on March 26. PRTY closed on Thursday at $2.03.
Sosin founded CAS in 2012. As of Q1, the fund had assets under management of $736M, including $455M in the five 13F securities.
An equal-weighted portfolio of Value Investor Clifford Sossin’s five holdings is up over 80% YTD.
The manager looks to be a rising star in the hedge fund world.
According the CAS Investment Partners’ ADV filed with the SEC, the fund operates based on
three core beliefs:
• Buying assets for substantially less than they are worth and/or selling assets for substantially
more than they are worth can be expected to provide investors both higher returns over time and less risk of permanent capital loss.
• It is necessary to act independently on the basis of sound facts and sound reasoning with little concern for short/medium term market volatility.
• Investment managers should be judged only for outperforming low-fee index-based products
CAS goes on to say:
The Firm invests in a tradable portfolio of credit and equity securities (on a long and short basis) which meet the following three criteria:
1) Understanding: The Firm seeks to understand what processes/dynamics are at work that allow an issuer to earn profits over time despite competitive forces and how changes to the competitive ecosystem might impact the asset’s future performance.
2) Margin of Safety: Based on the Firm’s expectations for the likely range of future outcomes, the expected return derived from the asset’s cumulative future cash flows substantially exceeds the expected return derived from the cumulative future cash flows of a similar investment in the broader market.
3) Creative Risk Imagination: The Firm believes that it is often risks which have not materialized in the recent past which are the most menacing. The Firm takes great care to think creatively about things that might go wrong which could threaten the profitability of an investment and to avoid investments where reasonably likely scenarios could result in permanent capital loss even if those scenarios are not the most likely scenarios.
Value Investor Clifford Sossin: CAS Investment Partners’ portfolio as of Q2’s close.
| Stock | Symbol | Shares Held | Market Value | % Portfolio | Ranking | Change in shares | % Change | % Ownership | Qtr first owned | Avg Price |
| Carvana co | CVNA | 3,824,284 | 210,680,000 | 47.93% | 1 | 1,049,366 | 37.8161% | 2.2448% | Q1 2018 | 39.52 |
| Cardlytics inc | CDLX | 4,014,259 | 122,956,753 | 27.97% | 2 | 62,744 | 1.5878% | 14.8855% | ||
| Herbalife nutrition ltd | HLF | 1,425,462 | 41,566,000 | 9.46% | 3 | 241,354 | 20.3828% | 1.0346% | Q4 2017 | 33.5837 |
| World acceptance corp. | WRLD | 703,061 | 38,394,000 | 8.73% | 4 | 105,075 | 17.5715% | 9.4779% | Q4 2017 | 80.4039 |
| At home group inc | HOME | 10,433,735 | 21,076,000 | 4.79% | 5 | 1,618,415 | 18.3591% | 16.255% | Q3 2019 | 8.2555 |
| Party city holdco inc | PRTY | 10,666,736 | 4,889,000 | 1.11% | 6 | 2,714,805 | 34.1402% | 11.2886% | Q3 2019 | 2.9447 |
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