Fiduciary Management, an investment management firm, published its “Large Cap Equity Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. The FMI Large Cap portfolios declined approximately 5.8% (gross)/5.9% (NET) in the March quarter compared to a 4.60% drop in the Standard & Poor’s 500 Index, and 0.74% loss in the Russell 1000 Value Index. Areas where the portfolio had little exposure such as Energy & Non-Energy Minerals, and our overweighting in Producer Manufacturing, explain the lion’s share of the difference between the Large Cap strategy and the Russell 1000 Value. Compared to the S&P 500, sectors that helped performance included Finance, Technology Services, and Commercial Services. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Fiduciary Management Large Cap Equity 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 vehicle retailer with a $14.5 billion market capitalization. CarMax, Inc. (NYSE:KMX) delivered a -30.38% return since the beginning of the year, while its 12-month returns are down by -30.83%. The stock closed at $90.67 per share on April 21, 2022.
Here is what Fiduciary Management Large Cap Equity has to say about CarMax, Inc. (NYSE:KMX) in its Q1 2022 investor letter:
“CarMax, headquartered in Richmond, VA, is the largest and most profitable used car retailer in the U.S., selling a combined 1.596 million used vehicles annually through retail and wholesale channels across its 226 stores and omni-channel platform. The company has just 4% of a huge $750 billion market. It operates across two segments, CarMax Sales Operation and CarMax Auto Finance (CAF), together covering all aspects of auto merchandising, service, and financing. By segment, the profit is also split into CarMax Sales Operations (80%) and CAF (20%).5 CarMax Sales Operation has three primary sources of revenue: Used (78% of sales and 63% of segment gross profit), Wholesale (19% of sales and 21% of segment gross profit), and Other (3% of sales and 16% of segment gross profit).
Good Business
The CarMax brand stands for providing a large selection of high-quality used vehicles at fair prices, and it has earned the trust of customers since beginning operations nearly 30 years ago.
The company has demonstrated consistent growth and leading profitability in one of the largest retail markets in the world ($750 billion). Sales and earnings per share (EPS) have grown at +8% and +11% annually over the last decade, with return on equity averaging approximately 20%…” (Click here to see the full text)
Photo by BezeVision on Unsplash
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 35 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 36 funds in the previous quarter. CarMax, Inc. (NYSE:KMX) delivered a -16.12% return in the past 3 months.
In February 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 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
