Giverny Capital, an investment management company, recently published its fourth-quarter investor letter in 2022. A copy of the same can be downloaded here. The model portfolio of the firm appreciated 8.49%, net of fees in the fourth quarter compared to a 7.56% return for the Standard & Poor’s 500 Index. For 2022, the fund delivered a -22.65% return compared to a -18.11% return for the Index. Oil and energy was the strongest sector in the year increased by 65%. In addition, you can check the top 5 holdings of the fund to see its best picks for 2022.
Giverny Capital highlighted stocks like CarMax, Inc. (NYSE:KMX) in its Q4 2022 investor letter. Based in Richmond, Virginia, CarMax, Inc. (NYSE:KMX) is a used car retailer. On January 27, 2023, CarMax, Inc. (NYSE:KMX) stock closed at $69.10 per share. One-month return of CarMax, Inc. (NYSE:KMX) was 13.48%, and its shares lost 37.84% of their value over the last 52 weeks. CarMax, Inc. (NYSE:KMX) has a market capitalization of $10.919 billion.
Giverny Capital made the following comment about CarMax, Inc. (NYSE:KMX) in its Q4 2022 investor letter:
“CarMax, Inc. (NYSE:KMX) declined 53% for the year. We wrote about Carmax in our third quarter letter and the story hasn’t changed. Demand for used cars plunged in 2022 for a variety of reasons, some of them related to the economic slowdown and higher interest rates but some of them quite unusual. Pandemic-related global supply chain shortages caused a decline in new car production. At the same time, economic reopening led to people traveling more. Rental car companies had to rebuild their fleets with used cars, driving prices beyond the reach of many consumers. So, Carmax saw a demand decline from consumers that was beyond normal cyclicality.
Carmax has invested heavily in recent years in online selling capabilities. This investment inflated expenses as demand weakened. I’m comfortable holding Carmax because I believe it has a superior model for selling used cars. No-haggle pricing appeals to many consumers, as does the ability to complete parts or all of a transaction online, reducing time spent in the dealership. Carmax has an efficient system for acquiring cars from consumers, refurbishing them for resale, leveraging national advertising and engaging outside lenders to make competitive financing offers to customers. The company continues to gain market share and senior management recently has been buying stock. I believe Carmax could earn $10 per share in a few years. The stock has been as low as $60 recently, seemingly reflecting a belief that this year’s depressed earnings of less than $4 per share represent a new normal rather than a cyclical low. I don’t share that belief.
Carmax lost half its value during 2022 and moved from our second-largest holding to the somewhat less exalted eighth spot.”
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CarMax, Inc. (NYSE:KMX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held CarMax, Inc. (NYSE:KMX) at the end of the third quarter which was 28 in the previous quarter.
We discussed CarMax, Inc. (NYSE:KMX) in another article and shared Madison Funds’ views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
