LKQ & Ananym: A Dip Worth Taking?

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Right. So, Ananym Capital, a firm that clearly enjoys a good rummage through the market’s bargain bin, has been topping up its stake in LKQ. Now, LKQ, for the uninitiated, is a sort of global clearing house for bits of cars. Not shiny new bits, mind you, but the stuff that falls off, gets dented, or just generally gives up the ghost. It’s a surprisingly large business, considering. I mean, think about it: for every gleaming vehicle rolling off the assembly line, there’s a whole ecosystem dedicated to keeping the existing ones patched up. It’s a bit like a vast, automotive hospice, really. And Ananym just added another $11 million worth of shares, which, in the grand scheme of things, isn’t enough to move the Earth, but it’s enough to warrant a closer look.

They picked up 361,902 shares in the last quarter, bringing their total holding to about 13.8% of their portfolio. That’s a significant chunk of change tied up in what is, let’s be honest, a fairly unglamorous industry. Compared to their other top holdings – Marriott Vacations (people enjoying themselves), Henry Schein (keeping dentists supplied – a noble profession), Baker Hughes (oil and gas, always interesting), and Scholastic (books! Good for them!) – LKQ feels a bit… utilitarian. But that, perhaps, is the point.

The stock has been underperforming, to put it mildly. Down nearly 15% over the past year, and lagging the S&P 500 by a rather substantial 29 percentage points. Which, from a trader’s perspective, presents an opportunity. Ananym clearly thinks so. They bought in around $36 a share last year, took some profits, and are now accumulating again around the $30 mark. A classic buy-the-dip strategy. It’s the sort of thing you see all the time, though it rarely involves quite so much automotive detritus.

Now, here’s where it gets interesting. And a little bit unsettling. The elephant in the garage, if you will, is the impending arrival of autonomous vehicles. The question isn’t if self-driving cars will become commonplace, but when. And when they do, what happens to a company whose entire business model is predicated on fixing broken things? It’s a perfectly reasonable question, and one the market is clearly pondering. LKQ currently trades at just 1.3 times book value and 12 times free cash flow, suggesting the market believes it’s facing a serious headwind.

I personally find Copart, which deals in salvage vehicles, a slightly more compelling play in this space. They’re dealing with the whole vehicle, not just the bits. But I can certainly see Ananym’s logic. LKQ is a leader in its niche, with a well-funded dividend yielding a respectable 3.7%. And the transition to autonomous vehicles isn’t going to happen overnight. It’s going to be a gradual process, spanning decades, perhaps. There will still be plenty of good old-fashioned, human-driven cars on the road for a long time to come, needing repairs and replacement parts.

So, LKQ is likely to remain a battleground stock for the foreseeable future. A tug-of-war between those who believe it’s a relic of a bygone era and those who see a continuing, if evolving, role for it in the automotive ecosystem. I suspect the outcome will be less dramatic than a sudden collapse and more a slow, steady adaptation. A bit like LKQ itself, really. A company built on patching things up, and now facing the challenge of patching itself up for the future.

Metric Value
Price (as of market close 2/17/26) $32.51
Market Capitalization $8.40 billion
Revenue (TTM) $13.96 billion
Net Income (TTM) $697.00 million

LKQ: Distributes replacement auto parts, components, and systems, including body panels, glass, salvage mechanical parts, and specialty vehicle accessories. Operates a diversified business model across North America and Europe, generating revenue primarily through the sale and distribution of automotive parts for repair and maintenance. Serves collision and mechanical repair shops, new and used car dealerships, and retail customers in the automotive aftermarket sector.

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2026-02-18 22:13