Leonard Green Portfolio: An In-Depth Look at a $6.1 Billion Legacy of Strategic Investments

HFA Padded
Predrag Shipov
Published on
Leonard Green Portfolio

Leonard Green passed away in 2002 but his influence over the investment world is still visible. He co-founded a company in 1969 that was focused on management-led, non-hostile leveraged buyouts. Green broke out of the first partnership to found his company in 1989. The company is still called Leonard Green & Partners and upholds most of its investment principles. Leonard Green's Portfolio is heavily concentrated over 12 holdings with a total value of $6.1 billion.

A substantial part of the portfolio takes Mister Car Wash Inc. (NYSE:MCW) while in not-so-close second is Wesco International Inc. (NYSE:WCC). Other holdings with higher weightings are Clarivate Plc (NYSE:CLVT), Life Time Group Holdings Inc. (NYSE:LTH), and Williams-Sonoma Inc. (NYSE: WSM).

The fund has been quiet in the last quarter with the only move being the sale of 4 million shares of the AerSale Corp (NASDAQ: ASLE). Some of the big players from the portfolio including Mister Car Wash Inc., Clarivate Plc, and Catalent Inc. have been underperforming for a prolonged period, pushing the fund into the red.

Key Takeaways

  • Leonard Green & Partners was founded in 1989 by Leonard Green.
  • The core strategy of the company is non-hostile leveraged buyouts.
  • Leonard Green has been utilizing this strategy since 1969 and the work in Gibbons, Green, van Amerongen.
  • Green died in 2002 but the fund kept his name and most of the old strategy.
  • When choosing companies to invest in the firm prefers strongly positioned companies with a potential for growth.

Key Holdings

Mister Car Wash Inc. (NYSE:MCW) with 31.04% of the portfolio

Being a relatively new investment dating to Q2 2022 Mister Car Wash Inc. managed to generate substantial losses. The firm owns 219.2 million shares valued at $1.89 billion, and the entire stake was bought at a price of $21.25 per share. Since then the price was steadily declining, reaching $8. From this, it is easy to see that the average buying price is 63% higher than the price at which is the stock now traded.

Wesco International Inc. (NYSE:WCC) with 18.26% of the portfolio

Wesco in contrast to Mister Car Wash has been a great stock pick for the Leonard Green & Partners. They started investing slowly in Q2 2020 with an acquisition of 2.5 million shares. Soon after they increased their stake to 5.7 and then to the current 6.41 million shares. The firm paid an average price of $43.50 while its current price is $178 meaning that the difference between these figures is an astounding 308%. The current value of the holding risen to $1.11 billion.

Clarivate Plc (NYSE:CLVT) with 17.70% of the portfolio

Clarivate an analytics company is an even more extreme example of the Mister Car Wash. In Q4 2020 the firm bought a massive stake in Clarivate, for $29.55. The price from then plummeted to a current value of $6.55. This is an 80% decrease in value from the original investment per share. The value of the holding is at a reported $1.08 billion.

Life Time Group Holdings Inc. (NYSE:LTH) with 14.52% of the portfolio

The partnership between Life Time Group and Leonard Green & Partners started while the former was still a private company. In 2021 they filed to become a publicly traded company. At the time Life Time Group intended to sell 46 million shares for prices between $18 and $21. LG& P acquired their stake at $18, while the current price is $15. This means that the firm is still at a loss from this endowment.

Williams-Sonoma Inc. (NYSE:WSM) with 10.62% of the portfolio

Williams-Sonoma Inc. is a new addition to Leonard Green & Partner's portfolio been a part of it since Q3 2023. After being backed by the firm its stock price has soared, during 2024 its stock value went through the roof moving from $196 to $317. LG&P bought the 3.21 million stake at $140 so the current price is a 125% increase from the original value. Holding is currently valued at $648 million.

Catalent Inc. (NYSE:CTLT) with 3.20% of the portfolio

Catalent, besides Clarivate and Mister Car Wash, is one of the biggest detractors in the Leonard Green & Partners portfolio. While they bought almost 5 million stocks for $128.50, their stock is now valued at $55. And the downturn began in 2023 when the price started to fall. The difference between the buying price, and the current price is substantial with the figure being about 55%. The holding is valued at $195 million.

AerSale Corp (NASDAQ:ASLE) with 1.99% of the portfolio

The only activity of the fund in the last quarter was selling almost 30% of the AerSale Corp at $13.82. Since then the price reached a new low with the value dropping below $7. At the moment, the price is showing signs of an upward trend reaching $8.25. The firm average buying price for AerSale stock was $13.5 so it is easy to notice how much they lost with this investment so far. At the moment they own 9.57 million stocks with a value stamp of $121.44 million.

Sector Allocation

With a total of 12 stocks in a portfolio worth $6.1 billion, it is not hard to guess that it is highly concentrated. However, when your preferred strategy is closely connected with activism and buyout it is not strange for a firm to own a smaller number of substantial holdings. 

The sector allocation also cannot be attributed as diversified since the majority of holdings are concentrated in a couple of sectors. The current Leonard Green & Partners portfolio is allocated to these sectors:

  • Consumer Cyclical with 57.04% of the portfolio valued at $3.47 billion
  • Industrials with 20.25% of the portfolio valued at $1.23 billion
  • Technology with 17.70% of the portfolio valued at $1.07 billion
  • Healthcare with 4.11% of the portfolio valued at $250 million
  • Telecommunication with 0.92% of the portfolio valued at $56 million

Leonard Green Biography

Leonard Green was raised in Philadelphia and in 1955 he obtained a B.A. in economics from Cornell University. A year later he earned his M.B.A from the University of Pennsylvania. He didn't stop there, and in 1965 he received a law degree from Loyola University in Chicago.

After finishing his studies he co-founded in 1969 a New York investment banking partnership called Gibbons, Green, van Amerongen. It was specialized in non-hostile leveraged buyouts. Twenty years later he decided to incept his own company Leonard Green & Partners based in Los Angeles.

Leonard Green Partners Strategies

Their preferred strategy is to buy big, sometimes with the intention of getting a couple of people on the board. The fund often utilizes the leveraged buyout to meet the cost of acquisition. 

When searching for potential investment options the firm aims to find companies that are leaders in the market. Those companies have a strong starting position that offers a potential for steady and long-term growth.

The second criterion stems from the first, and companies not only need to have a potential for growth but also several ways to get to it. 

Once they invest value creation process can be accomplished through several processes. Some of the preferred means include operational improvements, strategic initiatives, and financial restructurings.

The core of the activist approach is to look at the company's potential over the long term. The current condition doesn't always need to reflect its potential in the future. What is important is that there is enough material to work with, which can be transformed into a better version of self.

While not always being the case, the management of the company takes an active part in managing companies from their portfolio. They are teamed up with company management in search of the best ways to improve the business for the sake of the shareholders.

Leonard Green & Partners is always open to cooperation with other investors and forming investment syndicates. Through this form of partnership, they aim to leverage expertise and manage risk. 

As an exit strategy, they prefer to go with the initial public offering, providing a chance for a company to go public. 

Leonard Green Partners Portfolio Performance Analysis

Historical Performance

Since the lack of sources for the performance from the Leonard Green era, we can only take into account the past three years' data. In the last three years, the fund generated a negative cumulative return of -48.47%.

Notable Success

  • The Merger Of Thrifty Drugs and Payless Drugs

Green's firm acquired in 1992 Thrifty Drugs for $40 million, while in 1994 they bought Payless Drugs for $1.2 billion. Two companies merged creating Thrifty Payless and managed to become the largest drugstore chain in the Western United States. In 1996 the company went public and was sold to Rite Aid for $2.3 billion. As a result, Green's firm netted a gain of $420 million.

Notable Failure

  • Several Big Players In The Portfolio

The current portfolio of the company has several performance sore thumbs. Some of them include Mister Car Wash Inc. Clarivate and Catalent. Some are still early to make a judgement like AerSale and Life Time Group.