Here’s What Pressured CarMax (KMX) in Q3
Diamond Hill Capital, an investment management company, released its “Select Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Markets continued their YTD rally in the third quarter, with the Russell 3000 Index surging 8%. At the same time, the portfolio underperformed the Russell 3000 Index, returning 4.98%. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.
In its third-quarter 2025 investor letter, Diamond Hill Select 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 -7.78%, and its shares lost 42.66% of their value over the last 52 weeks. On October 29, 2025, CarMax, Inc. (NYSE:KMX) stock closed at $42.46 per share, with a market capitalization of $6.235 billion.
Diamond Hill Select Fund stated the following regarding CarMax, Inc. (NYSE:KMX) in its third quarter 2025 investor letter:
"Among our bottom individual Q3 contributors were American International Group (AIG) and CarMax, Inc. (NYSE:KMX). Used car dealer CarMax saw a meaningful slowdown in used retail vehicle sales as well as higher credit-loss provisions in its captive financing arm. We believe consumers likely pulled forward vehicle purchases ahead of tariffs, leading to a recent industry lull. Combined with uncertain consumer sentiment and heightened competition, shares were pressured in the quarter. However, we believe CarMax remains capable of taking share in a fragmented market over the longer term and are confident in the management team, which is focused on finding efficiencies to enable it to spend more on consumer-facing initiatives."
CarMax, Inc. (NYSE:KMX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 54 hedge fund portfolios held CarMax, Inc. (NYSE:KMX) at the end of the second quarter, compared to 59 in the previous quarter. CarMax, Inc. (NYSE:KMX) reported total sales of $6.6 billion in the fiscal second quarter of 2026, a 6% decline from last year due to lower volume. While we acknowledge the potential of CarMax, Inc. (NYSE:KMX) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.
In another article, we covered CarMax, Inc. (NYSE:KMX) and shared the list of oversold mid-cap stocks to buy according to hedge funds. CarMax, Inc. (NYSE:KMX) was one material detractor to Vulcan Value Partners' performance in Q3 2025. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.
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