Weitz Investment: “CarMax (KMX) is in the Penalty Box”

Weitz Investment Management, an investment management firm, published its “Weitz Partners Value Fund” third-quarter 2022 investor letter – a copy of which can be downloaded here. The Partners Value Fund’s Institutional Class returned -6.32% for the third quarter compared to -4.46% for the Russell 3000. Year-to-date, the Fund’s Institutional Class has returned -27.22% compared to -24.62% for the Russell 3000. Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.

In its Q3 2022 investor letter, Weitz Partners Value Fund mentioned CarMax, Inc. (NYSE:KMX) and explained its insights for the company. Founded in 1993, CarMax, Inc. (NYSE:KMX) is a Richmond, Virginia-based used car company with a $10.3 billion market capitalization. CarMax, Inc. (NYSE:KMX) delivered a -49.66% return since the beginning of the year, while its 12-month returns are down by -55.24%. The stock closed at $67.12 per share on November 29, 2022.

Here is what Weitz Partners Value Fund has to say about CarMax, Inc. (NYSE:KMX) in its Q3 2022 investor letter:

“Used car demand softened as vehicle prices remained high and borrowing costs rose, reducing affordability. CarMax (NYSE:KMX)‘s unit volumes fell, while expenses continued to rise as the company invests for the omnichannel future. While the company continued to gain market share, near-term earnings will suffer. We think CarMax is well-positioned to weather the cyclical storm, but for now the stock is in the penalty box.”

Our calculations show that CarMax, Inc. (NYSE:KMX) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. CarMax, Inc. (NYSE:KMX) was in 25 hedge fund portfolios at the end of the second quarter of 2022, compared to 28 funds in the previous quarter. CarMax, Inc. (NYSE:KMX) delivered a -27.72% return in the past 3 months.

In October 2022, we also shared another hedge fund’s views on CarMax, Inc. (NYSE:KMX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.

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