TORONTO — An activist investor wants AutoCanada Inc. to launch a strategic review to explore options, including a possible sale, for the publicly traded auto dealership group.
In an open letter to the chairman of AutoCanada, Clearwater Capital Management president Roland Keiper raised concerns about how the company has been performing and suggested AutoCanada may be an attractive acquisition target.
Keiper says there appears to be significant concern about the poor margins experienced by AutoCanada in its first quarter.
AutoCanada Inc.’s net income jumped 31 per cent in the first quarter from a year earlier, even as revenue and vehicle sales at Canada’s only publicly held dealership group declined.
Net income rose to $4.8 million (US$3.7 million), the company said at the time of reporting its earnings.
Revenue fell 2.9 per cent to $620.5 million (US$482 million), while total vehicle sales dipped three per cent to 12,667 units. The sales decline was driven in large part by a 16 per cent decline in fleet sales of new vehicles.
Clearwater says it recently acquired a new investment position in AutoCanada shares on behalf of its managed accounts, but did not disclose the size of its stake.
AutoCanada did not immediately reply to a request for comment.
AutoCanada owns a wide range of auto dealerships across Canada and in Illinois.