Kiltearn's $8 Million LKQ Bet Signals Auto Parts Faith
💡 Key Takeaway
A major institutional investor is betting big on LKQ's turnaround despite the stock's multi-year decline.
The $8 Million Auto Parts Wager
Kiltearn Partners LLP made a significant move in Q4 2025, purchasing 264,600 shares of automotive parts distributor LKQ Corporation. The transaction was valued at approximately $8 million based on the quarter's average stock price. This purchase increased Kiltearn's LKQ position to 3.24% of their reportable assets under management.
While LKQ didn't crack Kiltearn's top five holdings (which include AMG, DG, and CVS), it became their 12th largest position with a quarter-end value around $15 million. The investment comes during a challenging period for LKQ shareholders - the stock was trading at $34.10 as of February 2026, down 8.6% over the past year.
The timing is particularly interesting given LKQ's recent strategic moves. Last September, the company sold its self-service segment and subsequently raised its 2025 operating cash flow guidance by $25 million. More recently, LKQ initiated a strategic review that could include a potential sale of the entire company.
Kiltearn's investment represents a vote of confidence despite LKQ's stock being down approximately 43% from its 2022 peak. The firm appears to be betting that recent corporate actions will unlock value that the market has overlooked.
Reading the Institutional Tea Leaves
When a sophisticated investor like Kiltearn makes an $8 million bet on an underperforming stock, it's worth understanding their rationale. Institutional moves often signal deeper fundamental analysis than retail investors can access. In this case, Kiltearn seems to be positioning for a turnaround story rather than chasing recent performance.
The automotive aftermarket industry has defensive characteristics that might appeal to investors anticipating economic uncertainty. When consumers delay new car purchases, they typically spend more maintaining existing vehicles - benefiting companies like LKQ that supply replacement parts. This counter-cyclical nature could be part of Kiltearn's investment thesis.
LKQ's strategic shifts appear central to the bullish case. The self-service segment divestiture and potential company sale suggest management is serious about maximizing shareholder value. The raised cash flow guidance provides tangible evidence that these moves are already improving financial performance.
For retail investors, this transaction highlights how professional money managers sometimes zig when others zag. While LKQ has dramatically underperformed the S&P 500, Kiltearn's investment suggests they see hidden value that could emerge through restructuring or acquisition.
Bobby Insight
LKQ presents a compelling speculative opportunity for investors who can tolerate automotive sector volatility.
The combination of institutional backing, strategic restructuring, and potential acquisition interest creates multiple paths to shareholder returns. While past performance has been poor, the current valuation appears to discount much of the risk.
What This Means for Me
