On December 31, 2024, Barrow, Hanley, Mewhinney & Strauss (Trades, Portfolio) executed a strategic reduction in its holdings of Lithia Motors Inc. The firm decreased its position by 29,770 shares, which resulted in a -0.03% impact on its portfolio. This transaction was carried out at a trade price of $357.43 per share, leaving the firm with a total of 1,608,133 shares in Lithia Motors, which now constitutes 1.88% of its portfolio. This move reflects the firm's ongoing strategy to optimize its investment portfolio while maintaining a significant stake in the company.

Barrow, Hanley, Mewhinney & Strauss (Trades, Portfolio): A Value Investing Powerhouse

Barrow, Hanley, Mewhinney & Strauss (Trades, Portfolio) is a Dallas-based investment firm renowned for its value investing approach. The firm manages substantial portfolios, including the Vanguard Windsor II and Selected Value Funds. Known for its disciplined investment philosophy, the firm focuses on equity portfolios with below-market price-to-earnings and price-to-book ratios, coupled with above-market dividend yields. This strategy has consistently delivered strong returns, as evidenced by the Selected Value Funds' average annual return of 9.33% over a decade, outperforming the market. The firm's top holdings include Air Products & Chemicals Inc (APD, Financial), Carnival Corp (CCL, Financial), and Enbridge Inc (ENB, Financial).

Understanding Lithia Motors Inc.

Lithia Motors Inc., founded in 1946 and publicly traded since 1996, is a leading retailer of new and used vehicles. The company operates nearly 500 stores globally, with a significant presence in the US, Canada, and the UK. Lithia Motors has expanded primarily through acquisitions, aiming to grow its footprint in various markets. In 2023, the company reported annual revenue of $31 billion, with expectations to exceed $50 billion in the coming years. The US market accounted for 90% of its 2023 revenue, with the UK expected to increase its share following the 2024 Pendragon acquisition.

Financial Performance and Valuation of Lithia Motors

As of February 14, 2025, Lithia Motors boasts a market capitalization of $10.2 billion and a current stock price of $383. The stock is considered fairly valued with a GF Value of $359.23, indicating a price-to-GF Value ratio of 1.07. The company's GF Score of 94/100 suggests a high potential for outperformance. Despite challenges in earnings growth, Lithia Motors has demonstrated robust revenue growth of 19.30% over the past three years, supported by a strong Growth Rank of 10/10.

Impact on Barrow, Hanley, Mewhinney & Strauss (Trades, Portfolio)'s Portfolio

Following the transaction, Lithia Motors remains a significant component of Barrow, Hanley, Mewhinney & Strauss (Trades, Portfolio)'s portfolio, representing 1.88% of its total holdings. The firm's investment philosophy aligns well with Lithia's financial metrics, emphasizing equity portfolios with above-market dividend yields. This strategic reduction allows the firm to maintain a balanced portfolio while capitalizing on Lithia's growth potential.

Market and Industry Context

Lithia Motors operates within the Vehicles & Parts industry, focusing on expansion through acquisitions. The company's revenue growth has been impressive, with a 19.30% increase over the past three years. However, it faces challenges in earnings growth, which declined by 9.20% during the same period. Despite these challenges, Lithia Motors continues to pursue growth opportunities, particularly in the US and UK markets.

Other Notable Investors in Lithia Motors

In addition to Barrow, Hanley, Mewhinney & Strauss (Trades, Portfolio), other prominent investors in Lithia Motors include Glenn Greenberg (Trades, Portfolio), Leon Cooperman (Trades, Portfolio), and HOTCHKIS & WILEY. The involvement of these investors underscores the stock's attractiveness within the value investing community, highlighting its potential for long-term growth and profitability.

Transaction Analysis

The recent reduction in Lithia Motors shares by Barrow, Hanley, Mewhinney & Strauss (Trades, Portfolio) reflects a strategic portfolio adjustment. While the firm decreased its stake, it continues to hold a substantial position, indicating confidence in Lithia's long-term prospects. The transaction's impact on the firm's portfolio was minimal, with a -0.03% change, suggesting a calculated move to optimize returns while maintaining exposure to a leading player in the automotive retail industry.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.