CarMax (KMX) Fell Amid Concerns Over Sustaining Growth Rates

Diamond Hill Capital, an investment management company, released its “Large Cap Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. After a significant decline in April following President Trump’s “Liberation Day” tariffs announcement, markets recovered and increased consistently for the remainder of the quarter. The strategy modestly trailed the Russell 1000 Value Index in the second quarter and returned 2.87% (net) vs 3.79% for the index. The financial and consumer discretionary holdings lagged, while healthcare and communication services outperformed, boosting overall performance. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.

In its second-quarter 2025 investor letter, Diamond Hill Large Cap Fund highlighted stocks such as CarMax, Inc. (NYSE:KMX). CarMax, Inc. (NYSE:KMX) is a used vehicle retailer headquartered in Richmond, Virginia. The one-month return of CarMax, Inc. (NYSE:KMX) was -14.13%, and its shares lost 27.00% of their value over the last 52 weeks. On August 7, 2025, CarMax, Inc. (NYSE:KMX) stock closed at $55.25 per share, with a market capitalization of $8.291 billion.

Diamond Hill Large Cap Fund stated the following regarding CarMax, Inc. (NYSE:KMX) in its second quarter 2025 investor letter:

“Among our bottom Q2 individual contributors were CarMax, Inc. (NYSE:KMX), ConocoPhillips and Diamondback Energy. Shares of used car dealer CarMax declined as investors considered whether the company can sustain its recent growth rates, despite some weakness in its captive financing arm.”

Jim Cramer Holds on CarMax (KMX): “Don’t Sell It Down Here — That’s a Remarkable Decline”

A happy customer inspecting a newly purchased used car with the help of a sales assistant.

CarMax, Inc. (NYSE:KMX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 59 hedge fund portfolios held CarMax, Inc. (NYSE:KMX) at the end of the first quarter, compared to 57 in the previous quarter. In the first quarter, CarMax, Inc. (NYSE:KMX) delivered total sales of $7.5 billion, up 6% compared to last year. While we acknowledge the risk and potential of CarMax, Inc. (NYSE:KMX) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CarMax, Inc. (NYSE:KMX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered CarMax, Inc. (NYSE:KMX) and shared Ariel Appreciation Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.