Down 56% Year-to-Date, Major Institution Bails on Used Vehicle Retailer

Diamond Hill Capital Management reported a $251.04 million reduction in its CarMax (NYSE:KMX) stake for the quarter ended September 30, 2025, trimming 2,128,619 shares from its holdings.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 05, 2025, Diamond Hill Capital Management sold 2,128,619 shares of CarMax during the quarter, lowering its position value by $251.04 million since June 30, 2025. The fund now holds 4,833,319 CarMax shares, worth $216.87 million at quarter-end.

What Else to Know

This was a sell, leaving CarMax at 1.03% of the fund’s 13F reportable assets under management as of September 30, 2025.

Top holdings after the filing:

• AIG: $951.23 million (4.5% of AUM) as of September 30, 2025
• BRK-B: $891.17 million (4.2% of AUM) as of September 30, 2025
• ABT: $750.54 million (3.56% of AUM) as of September 30, 2025
• CL: $645.72 million (3.07% of AUM) as of September 30, 2025
• TXN: $600.90 million (2.85% of AUM) as of September 30, 2025

As of November 4, 2025, CarMax shares were priced at $40.75, down 44.2% over the year ended November 4, 2025 and underperforming the S&P 500 by 61.84 percentage points during the past year.

Company Overview

Company Snapshot

Offers a wide selection of used vehicles, including domestic, imported, luxury, hybrid, and electric models, as well as vehicle protection plans and reconditioning services.

Operates a retail-driven business model with revenue generated from used vehicle sales, wholesale auctions, financing through CarMax Auto Finance, and related service offerings.

Targets retail consumers across the United States seeking reliable used vehicles and flexible financing options.

CarMax, Inc. is a leading U.S. retailer of used vehicles, serving a broad spectrum of customers. The company leverages a multi-channel sales approach and integrated financing solutions.

Foolish take

Diamond Hill Capital Management's recent sale of more than $250 million worth of CarMax shares is a very significant move, and it signals another major hurdle for a company and stock which has already faced several challenges this year.

Shares of CarMax have slipped by nearly 56% year-to-date, dragged down by numerous factors:

• CEO Bill Nash is set to depart his role on December 1st
• The company has pre-announced weak third-quarter revenue and earnings (for the three months ending on November 30, 2025)
• Several Wall Street analysts have lowered their price targets for the stock

Adding to the company's troubles, its stock has been removed from the S&P 500 due to its shrinking market cap, which now stands at around $6.2 billion.

For retail investors, this transaction is a reminder that no company is guaranteed a spot in the S&P 500. If a company's market cap falls below a certain threshold, it will eventually be replaced, which could further increase bearish sentiment. Investors should take note.

Glossary

13F reportable assets: Securities that institutional investment managers must disclose quarterly to the SEC, showing their holdings.
Assets under management (AUM): The total market value of all investments managed by a fund or investment firm.
Position: The amount of a particular security or asset held by an investor or fund.
Stake: The ownership interest or share held in a company by an investor or fund.
Top holdings: The largest investments in a fund's portfolio, typically by market value.
Quarter (Q3 2025): A three-month period in a company’s financial calendar; Q3 refers to July–September.
Wholesale auctions: Sales events where vehicles are sold in bulk, often to dealerships, rather than directly to consumers.
Reconditioning services: Repairs and improvements made to used vehicles to prepare them for resale.
Multi-channel sales approach: Selling products through multiple methods, such as online, in-store, and other platforms.
Integrated financing solutions: Financial services, like loans, offered directly by the retailer to customers as part of the purchase process.
Fund: An investment vehicle pooling money from multiple investors to buy securities according to a specific strategy.
TTM: The 12-month period ending with the most recent quarterly report.

Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories, CarMax, Colgate-Palmolive, and Texas Instruments. The Motley Fool has a disclosure policy.