CarMax (KMX) Traded Lower Amid Macro Uncertainty

Ariel Investments, an investment management company, released its “Ariel Appreciation Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Following the initial market decline triggered by the “Liberation Day” tariff announcement, the stock market rebounded, bolstered by heightened interest in AI stocks, positive economic data, and robust corporate earnings. Against this backdrop, the fund increased +5.81% in the second quarter, outpacing the Russell Midcap Value Index’s +5.35% returns and trailing the Russell Midcap Index’s +8.53% returns. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Ariel Appreciation 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 -6.77%, and its shares lost 22.49% of their value over the last 52 weeks. On July 18, 2025, CarMax, Inc. (NYSE:KMX) stock closed at $62.62 per share, with a market capitalization of $9.398 billion.

Ariel Appreciation Fund stated the following regarding CarMax, Inc. (NYSE:KMX) in its second quarter 2025 investor letter:

“Lastly, used and wholesale vehicle auction operator, CarMax, Inc. (NYSE:KMX), trader lower in the quarter. Although the company’s earnings rose sharply year-over-year, management suspended the timeframes around its long-term strategic objectives due to macro uncertainty. At current levels, KMX’s valuation is particularly attractive. Management has a strong track record of navigating headwinds and their inventory management expertise, alongside KMX’s brand and scale are difficult to replicate. Looking out, we believe the company has a long runway for growth as its omni-channel presence and initiatives targeted at personalizing the consumer experience seamlessly combine its world-class in-store experience and online offerings.”

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 Alphyn Capital Management’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.