Value Fund Doubles Down With $8.7 Million Buy as Driven Brands Targets $2.1 Billion in Revenue
Key Points
New Orleans-based Emeth Value Capital added 582,255 shares of Driven Brands in the fourth quarter.
The estimated transaction size was $8.66 million based on quarterly average pricing.
Driven Brands now accounts for 70.4% of Emeth Value Capital's 13F assets, making it the fund's largest holding.
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On Wednesday, New Orleans-based Emeth Value Capital disclosed a buy of 582,255 shares of Driven Brands (NASDAQ:DRVN), an estimated $8.66 million transaction based on quarterly average pricing.
What Happened
According to an SEC filing released Wednesday, Emeth Value Capital increased its position in Driven Brands (NASDAQ:DRVN) by 582,255 shares during the fourth quarter. The estimated value of the share purchases was $8.66 million, calculated using the quarter's average closing price. As a result, the quarter-end value of the stake rose by $4.26 million, reflecting both new share accumulation and price changes.
What Else to Know
Driven Brands comprised 70.4% of Emeth Value Capital's 13F reportable AUM at quarter-end.
Top holdings after the filing:
- NASDAQ:DRVN: $57.00 million (70.4% of AUM)
- NYSE:BUR: $12.34 million (15.2% of AUM)
- NYSE:ARCO: $7.68 million (9.5% of AUM)
- NASDAQ:SEAT: $4.02 million (5.0% of AUM)
As of Tuesday, shares of Driven Brands were priced at $14.96, down 4.7% over the past year and trailing the S&P 500 by 22.5 percentage points.
Company Overview
| Metric | Value |
|---|---|
| Price (as of market close Tuesday) | $14.96 |
| Market capitalization | $2.42 billion |
| Revenue (TTM) | $2.44 billion |
| Net income (TTM) | ($239.62 million) |
Company Snapshot
- Driven Brands provides automotive services including paint, collision, glass, vehicle repair, car wash, oil change, and maintenance, as well as distribution of automotive parts and consumables.
- The company operates through a mix of company-operated, franchised, and independently operated stores, generating revenue from service fees, product sales, and franchise royalties.
- It serves retail and commercial customers across the United States, Canada, and internationally, targeting vehicle owners, repair shops, and automotive outlets.
Driven Brands is a leading automotive services platform with a diversified portfolio of brands and over 10,000 employees. The company's strategy leverages scale and franchise operations to deliver a comprehensive suite of repair, maintenance, and distribution solutions. Its broad service offering and international footprint position it as a key player in the automotive aftermarket sector.
What this transaction means for investors
By allocating more capital to Driven Brands, Emeth is pushing an already concentrated position even further, signaling confidence that the company’s cash-generating engine is being underappreciated by the market. Shares have fallen about 5% over the past year, badly trailing the S&P 500, yet the underlying business continues to do exactly what long-term investors typically want.
In its most recent quarter, Driven Brands posted $535.7 million in revenue, up 6.6% year over year, while adjusted EBITDA rose to $136.3 million. Same-store sales grew for the 19th consecutive quarter, driven largely by Take 5 Oil Change, and management narrowed full-year guidance to between $2.10 billion and $2.12 billion in revenue and $525 million to $535 million in adjusted EBITDA. Just as important, net leverage improved to 3.8x, reflecting steady progress on the balance sheet.
More broadly, this fund holds only a handful of names, and Driven Brands now dwarfs positions in Burford Capital and Arcos Dorados. That structure suggests a belief that a scaled, franchise-heavy automotive services platform can compound quietly through cycles. Ultimately, durability, recurring demand, and incremental deleveraging can matter more than short-term stock performance when conviction is this high.
Glossary
Buy (in institutional context): An investment manager's purchase of additional shares to increase the fund's stake in a company.
Quarterly average pricing: The average share price over a specific quarter, used to estimate transaction values.
Reportable AUM: Assets under management that must be disclosed in regulatory filings, such as the Securities and Exchange Commission's (SEC) Form 13F.
13F assets: Securities holdings reported by institutional investment managers on SEC Form 13F, typically U.S.-listed stocks.
Stake: The total ownership interest an investor or fund holds in a company, usually measured in shares or percentage.
Franchised stores: Locations operated by independent owners under the company's brand and business model, paying fees or royalties.
Company-operated stores: Retail locations directly managed and owned by the parent company, not by franchisees.
Independently operated stores: Outlets run by third parties, not directly owned or franchised by the parent company, but may carry its products or services.
Service fees: Charges collected for providing services, separate from product sales or franchise royalties.
Franchise royalties: Ongoing payments made by franchisees to the parent company for using its brand and systems.
Automotive aftermarket sector: The industry providing parts, services, and accessories for vehicles after their initial sale.
TTM: The 12-month period ending with the most recent quarterly report.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Burford Capital. The Motley Fool has a disclosure policy.
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