AutoNation, Inc. (NYSE:AN), the automotive retailer, released its earnings report for the three month period ending June 30 this morning before the markets opened on Wall Street. The company showed earnings of $0.73 per share on revenue of $4.43 billion for the period. AutoNation, Inc. (NYSE:AN) shares closed at a price of $45.47 on yesterday’s market.


In the run up to this earnings release, analysts studying the auto retailer were looking for earnings of 73 cents per share for the second quarter of the year. Consensus revenue estimates showed the company was expected to bring in $4.33 billion for the period. In the same three months of 2012, AutoNation, Inc. (NYSE:AN) earned 66 cent per share on revenue of $3.9 billion.

Autonation Hedge Fund Darling

Late last year AutoNation, Inc. (NYSE:AN) was one of the top stocks held by hedge funds in the United States. In the third quarter of 2012, the firm’s stock was featured in 0.8 percent of hedge fund portfolios sampled by Credit Suisse Group AG (NYSE:CS). Since then, however, some investors have not been quite as kind to the company.

Eddie Lampert, the ESL Investments Inc founder, was a big seller of the stock in the fourth quarter of 2012, and the Bill and Melinda Gates Foundation was also seen dropping some of the company’s stock. Looking at the company’s performance to date in 2013, their choice appears to be justified.

Market Lag

AutoNation Inc. (NYSE:AN) shares have gained just 14.5 percent since the start of the year, a solid number in most years, but not in 2013. In the same period the S&P 500 has gained more than 18 percent. AutoNation, Inc. (NYSE:AN) is lagging the market, and its investors aren’t likely happy.

In the period of strong auto sales the largest auto retailer in the country is lagging the wider market. The aberration is surely irritating the company’s investors as they see the auto companies themselves gain much more value in the period. Auto sales are growing, but investors in the retailer are not seeing that reflected in their portfolio. According to recent reports in fact, there is a high level of short interest in the company, it’s now the 146th most shorted company on the S&P 500.