Here’s Why the RS Large Cap Value Strategy Decided to Exit Its Position in LKQ Corporation (LKQ)

Core Insights - RS Investments' "RS Large Cap Value Strategy" underperformed the Russell 1000 Value Index in Q3 2025, returning 4.47% net compared to the Index's 5.33% [1] - Adverse stock selection in the Consumer Discretionary and Consumer Staples sectors negatively impacted the portfolio's performance [1] Company Analysis: LKQ Corporation - LKQ Corporation is a leading distributor of vehicle products and parts, with a market capitalization of $8.1 billion and a stock price of $31.48 as of October 27, 2025 [2] - The one-month return for LKQ Corporation was 3.08%, but it experienced a significant decline of 15.76% over the last 52 weeks [2] - LKQ is the largest provider of alternative vehicle products in North America, historically growing at GDP+ in a recession-resistant industry [3] - The collision repair industry has faced a cumulative decline of over 15% in vehicle repair volumes due to inflation on insurance rates and repair costs, with LKQ's volumes down 8% to 9% [3] - The anticipated stabilization of the North American collision repair market has not yet occurred, leading to LKQ's stock underperformance in the quarter [3] - Incremental tariffs on imported auto parts are expected to further increase collision repair costs, prompting the company to exit its position in LKQ for the time being [3]