FPA Crescent Fund: “CarMax (KMX) has the Opportunity to Gain Market Share”

FPA Crescent Fund, an investment management company, recently published its second-quarter 2022 investor letter. A copy of the same can be downloaded here. The fund returned -9.32% in the second quarter and for the trailing 12 months, it declined by 10.69%. The top five performers provided 3.4% to the fund’s return. You can view the top 5 holdings of the fund to know its best picks in 2022.

In the second quarter investor letter 2022, FPA Crescent Fund discussed its holdings like CarMax, Inc. (NYSE:KMX). It is a Richmond, Virginia-based used car retailer and has a market capitalization of $15.788 billion. The stock of  CarMax, Inc. (NYSE:KMX) closed at $99.47 per share on August 4, 2022. On a monthly time frame, CarMax, Inc. (NYSE:KMX) had a return of 6.71% whereas its 12-month return dropped to -26.22%.

Here is what FPA Crescent Fund specifically mentioned about CarMax, Inc. (NYSE:KMX) in its Q2 2022 investor letter:

”CarMax, Inc. (NYSE:KMX) has three operating segments: used retail, used wholesale, and used auto lending. The general market decline and recession concerns have caused its stock price to decline by almost half since it peaked in Q4 2021. CarMax is the largest U.S. company in the used car retail space. We think CarMax has the opportunity to gain share in the market due to its strong wholesale business, historically good returns on capital, and an excellent management team that invests for the future and allocates capital with an owner-oriented mindset.10 Recessionary concerns are valid as their lending business, in particular, will likely be hurt. We would not be surprised to see its stock price decline as a result and would consider the opportunity to increase the Fund’s stake at that time.”

Photo by Sara Kurfeß on Unsplash

CarMax, Inc. (NYSE:KMX) is not there on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held CarMax, Inc. (NYSE:KMX) at the end of the first quarter which was 35 in the previous quarter.

We discussed CarMax, Inc. (NYSE:KMX) in another article,  published in June, that shared Weitz Investment Management’s views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

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