Giverny Capital Exits Credit Acceptance as Market Focus Shifts to AI
Giverny Capital Asset Management disclosed in its recently released fourth-quarter 2025 investor letter that it has exited its position in Credit Acceptance Corporation (NASDAQ: CACC). The move comes as the firm navigates a market increasingly fixated on artificial intelligence investments, which has pressured the performance of portfolios weighted toward smaller, niche leaders.
The firm's portfolio returned a mere 0.01% for the quarter, significantly trailing the S&P 500's 2.66% gain. For the year-to-date period, it returned 12.58% versus the index's 17.88%. Giverny attributed the relative underperformance not to poor fundamentals from its holdings—which it said are excelling in earnings growth and capital returns—but to the market's overwhelming concentration on a handful of mega-cap technology stocks.
"While we acknowledge Credit Acceptance's potential," the letter stated, "we believe certain AI stocks present a more favorable risk-reward profile at this juncture." Credit Acceptance, which provides financing programs to automobile dealers, saw its stock close at $498.24 on January 30, 2026, with a one-month gain of 8.26% but a twelve-month loss of 2.42%. Hedge fund interest in the stock has waned, with 29 funds holding it at the end of Q3 2025, down from 39 the previous quarter.
The decision underscores a growing tension in equity markets: the chase for AI-related growth versus investments in companies with proven, steady cash flows. Credit Acceptance, with a market cap of $5.5 billion, operates in the competitive subprime auto loan sector, which faces cyclical headwinds and regulatory scrutiny.
Investor Reactions: A Clash of Perspectives
Eleanor Vance, Portfolio Manager at Steadfast Advisors: "Giverny's move is a pragmatic, if late, recognition of market reality. Capital flows are dictating performance right now, not traditional fundamentals. Staying invested in a stock facing sector-specific challenges while the market rewards a different narrative is a tough position for any active manager."
Marcus Thorne, Independent Financial Analyst: "This is pure performance chasing and a surrender to market irrationality. Credit Acceptance is a profitable company with a solid business model. Dumping it to chase inflated AI stocks is how you destroy long-term value. Giverny is capitulating to the hype, not managing for the cycle."
Dr. Anya Sharma, Economics Professor at Crestview University: "The shift away from firms like Credit Acceptance reflects a deeper market belief that AI will disrupt traditional finance, including lending. Whether that disruption is imminent or overstated is the key question. This transaction is a data point in the broader reallocation of capital toward perceived technological transformation."
Disclosure: This analysis is based on public filings and commentary. It is for informational purposes only and does not constitute investment advice.