Kettle Hill Builds $35 Million Position in LKQ as Stock Slides 19%

Kettle Hill Capital disclosed a new position in LKQ Corporation, acquiring 1,163,355 shares valued at about $35.53 million as of Sept. 30, 2025 (per its Nov. 13, 2025 13F), representing 7.99% of the fund’s reported U.S. equity assets and becoming its largest holding. LKQ, a $7.95 billion market-cap automotive parts distributor with TTM revenue of $13.96 billion, net income of $697 million and a 3.87% dividend yield, traded at $29.45 on Dec. 5, 2025—down 19.2% year-over-year and materially lagging the S&P 500. The sizable, new stake signals conviction in either an operational turnaround or a potential takeover catalyst and may attract further institutional interest, but the company’s multi-year underperformance leaves the near-term outlook uncertain.

Analysis

Kettle Hill Capital Management disclosed a new position in LKQ Corporation, purchasing 1,163,355 shares valued at approximately $35.53 million as of September 30, 2025 (SEC filing dated November 13, 2025). The stake represented 7.99% of the fund's reported U.S. equity 13F assets and, after the trade, became the firm's largest holding as total positions rose to 36, with PSN, WYNN, IFF and RKT also listed among top weights.

LKQ traded at $29.45 on December 5, 2025, with a market capitalization of $7.95 billion, trailing-twelve-month revenue of $13.96 billion, net income of $697 million and a 3.87% dividend yield. Shares have fallen 19.23% over the past year and roughly 8% over five years (CAGR -1.7%), materially underperforming the S&P 500 by 34.82 percentage points over the last year.

The size and timing of Kettle Hill's position implies conviction in either an operational turnaround or a potential strategic catalyst (including takeover speculation noted in commentary), and the move has prompted additional institutional interest. Key risks remain LKQ's multi-year underperformance and lack of a clearly articulated near-term catalyst; investors should therefore prioritize monitoring operational results, any M&A developments, and shifts in dividend or margin dynamics.

Key Decisions for Investors

• Monitor subsequent 13F filings, SEC disclosures and company statements for signs of an emerging catalyst or takeover activity given Kettle Hill’s 7.99% stake
• Size new exposure conservatively and consider staged entries because LKQ trades at a depressed price after a 19.2% Y/Y decline despite $13.96B TTM revenue and a 3.87% dividend yield
• If long LKQ, consider tactical hedges or trimming positions until there is clear evidence of improving margins, revenue trends or a confirmed strategic transaction due to the stock's prolonged underperformance