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Here’s Why CarMax (KMX) Slipped in Q2

Soumya Eswaran
·3 min read

Diamond Hill Capital, an investment management company, released its “Select Strategy” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. In Q2, markets saw a modest boost, delivering positive returns across the majority of regions and nations. The Russell 3000 Index showed a +3% increase in US stocks; however, the majority of the gains came from large-cap stocks, which increased by about +4%. Returns were negative across the cap spectrum, with mid-caps and small caps, as indicated by their respective Russell indices, each down about -3%. The portfolio underperformed the Russell 3000 Index in Q2 and returned -4.96% net of fees compared to 3.22% for the index. In addition, you can check the fund's top 5 holdings to find out its best picks for 2024.

Diamond Hill Select Strategy highlighted stocks like CarMax, Inc. (NYSE:KMX) in the second quarter 2024 investor letter. CarMax, Inc. (NYSE:KMX) is a used vehicle retailer headquartered in Richmond, Virginia. The one-month return of CarMax, Inc. (NYSE:KMX) was 13.62%, and its shares lost 0.98% of their value over the last 52 weeks. On July 29, 2024, CarMax, Inc. (NYSE:KMX) stock closed at $83.26 per share with a market capitalization of $12.995 billion.

Diamond Hill Select Strategy stated the following regarding CarMax, Inc. (NYSE:KMX) in its Q2 2024 investor letter:

"Other bottom contributors in Q2 included CarMax, Inc. (NYSE:KMX), Target Corporation and Enovis. Shares of used car dealer CarMax declined amid concerns surrounding the company’s ability to continue taking market share. While vehicle affordability continues pressuring the used car industry broadly, CarMax is focused on maintaining profitable sales and right-sizing its cost base to better position itself to capitalize on a more favorable environment."

Image: Courtesy of Carmax

CarMax, Inc. (NYSE:KMX) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held CarMax, Inc. (NYSE:KMX) at the end of the first quarter which was 38 in the previous quarter. The total gross profit of CarMax, Inc. (NYSE:KMX) in the first quarter was $792 million, down 3% year-over-year (see the details here). While we acknowledge the potential of CarMax, Inc. (NYSE:KMX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed CarMax, Inc. (NYSE:KMX) and shared Vulcan Value Partners' views on company. In the q2 2024 investor letter, Alphyn Capital Management shared its investment thesis for CarMax, Inc. (NYSE:KMX). In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

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