Alta Fox Capital Opens a Large $41 Million CarGurus Position

Alta Fox Capital disclosed a new, sizable position in CarGurus (NASDAQ: CARG), acquiring 1,098,700 shares valued at $40.90 million as of Sept. 30, 2025 — about 9.12% of the fund’s 13F-reportable AUM and the firm’s fourth-largest holding — raising the profile of the $3.6bn company among underfollowed small-cap investors. The stake arrives while CarGurus shares trade at $35.84 (Dec. 8/9, 2025), down 7% over 12 months, with TTM revenue of $926m and net income of $152m; the article notes a potential valuation rationale (roughly 15x FCF, 16x forward earnings) and frames Alta Fox’s move as a conviction bet on a CarGurus turnaround after its digital-wholesale pullback, a development that could attract renewed investor scrutiny of the online auto marketplace sector.

Analysis

Alta Fox Capital disclosed a new position in CarGurus (NASDAQ: CARG), acquiring 1,098,700 shares valued at $40.90 million as of Sept. 30, 2025; the stake represents 9.12% of Alta Fox’s 13F-reportable AUM, makes CARG the fund’s fourth-largest holding, and increases the fund’s U.S. equity count to 19 positions. The filing highlights a large, concentrated initial allocation consistent with Alta Fox’s focus on underfollowed small caps.

CarGurus is trading at $35.84 as of Dec. 8/9, 2025, with a one-year return of -7% (roughly 20 percentage points behind the S&P 500), TTM revenue of $926.42 million and net income of $151.99 million. The article cites a 17% average FCF margin, single-digit sales growth after winding down its digital wholesale business, and valuation metrics near 15x FCF and 16x forward earnings—figures that underpin the value case cited by the author.

Alta Fox’s move is a conviction bet that could improve sentiment and liquidity if followed by other institutions, but it also concentrates risk: CarGurus has recent operational headwinds (the failed wholesale initiative and its unwind) and has underperformed the market. Key near-term drivers to watch are evidence of consistent top-line recovery, FCF conversion, share-count reduction or further institutional accumulation; absent those, volatility and downside risk remain material.

Key Decisions for Investors

• Monitor subsequent 13F and institutional filings for follow-on accumulation as confirmatory evidence before increasing exposure,
• Consider a selective, size-constrained starter position given valuation (~15x FCF, 16x forward EPS) and a 17% FCF margin, but cap position size due to single-digit revenue growth and concentration risk,
• Demand operational proof points — sustained revenue stabilization, successful wind-down of the digital wholesale business, or continued FCF generation — before materially upping allocation,
• Use position sizing and/or hedges to manage downside risk because the stock has trailed the S&P by ~20 percentage points and Alta Fox’s large initial stake could amplify volatility