CarMax, Inc (KMX): Hedge Funds and Insiders Are Bullish, What Should You Do?

At the moment, there are plenty of methods market participants can use to watch their holdings. A couple of the most useful are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite money managers can outperform the market by a significant margin (see just how much).

Just as crucial, optimistic insider trading sentiment is another way to look at the financial markets. As the old adage goes: there are plenty of reasons for an executive to downsize shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if piggybackers understand what to do (learn more here).

CarMax, Inc (NYSE:KMX)

What’s more, let’s examine the newest info about CarMax, Inc (NYSE:KMX).

Hedge fund activity in CarMax, Inc (NYSE:KMX)

At the end of the second quarter, a total of 27 of the hedge funds we track were long in this stock, a change of 29% from the previous quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully.

Out of the hedge funds we follow, Natixis Global Asset Management’s Harris Associates had the most valuable position in CarMax, Inc (NYSE:KMX), worth close to $239.6 million, comprising 0.5% of its total 13F portfolio. The second largest stake is held by Tom Gayner of Markel Gayner Asset Management, with a $235.8 million position; the fund has 8.4% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Gilchrist Berg’s Water Street Capital, Steven Cohen’s SAC Capital Advisors and Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC.

Now, certain money managers have been driving this bullishness. Markel Gayner Asset Management, managed by Tom Gayner, assembled the most valuable position in CarMax, Inc (NYSE:KMX). Markel Gayner Asset Management had 235.8 million invested in the company at the end of the quarter. Gilchrist Berg’s Water Street Capital also initiated a $139.1 million position during the quarter. The other funds with new positions in the stock are Steven Cohen’s SAC Capital Advisors, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, and SAC Subsidiary’s Sigma Capital Management.

Insider trading activity in CarMax, Inc (NYSE:KMX)

Insider buying made by high-level executives is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time period, CarMax, Inc (NYSE:KMX) has experienced 1 unique insiders buying, and 7 insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to CarMax, Inc (NYSE:KMX). These stocks are Sonic Automotive Inc (NYSE:SAH), KAR Auction Services Inc (NYSE:KAR), Penske Automotive Group, Inc. (NYSE:PAG), Copart, Inc. (NASDAQ:CPRT), and AutoNation, Inc. (NYSE:AN). This group of stocks belong to the auto dealerships industry and their market caps are closest to KMX’s market cap.