CarMax Stock Down 47% This Past Year, But One Fund Is Betting $6 Million on a Turnaround

On February 2, BML Capital Management, LLC disclosed a new position in CarMax (NYSE:KMX), acquiring 155,000 shares in an estimated $5.99 million trade based on quarterly average pricing.

What happened

According to an SEC filing dated February 2, BML Capital Management disclosed a new position in CarMax (NYSE:KMX), purchasing 155,000 shares during the fourth quarter. The estimated value of the trade was $5.99 million, based on the quarter-end share price.

What else to know

The new position in CarMax represents 5.18% of BML Capital’s reported 13F assets under management after the filing.

Top holdings after the quarter:

• NASDAQ: ACRS: $42.89 million (38.0% of AUM)
• NASDAQ: AVIR: $26.74 million (23.7% of AUM)
• NASDAQ: ORMP: $9.03 million (8.0% of AUM)
• NASDAQ: TIL: $7.10 million (6.3% of AUM)
• NASDAQ: PMVP: $6.62 million (5.9% of AUM)

As of February 2, CarMax shares were priced at $44.78, down 46.84% over the past year and well underperforming the S&P 500’s roughly 15% gain in the same period.

Company overview

Company snapshot

• CarMax offers a wide selection of used vehicles, including domestic, imported, luxury, hybrid, and electric models, along with extended protection plans and vehicle repair services.
• The company operates an integrated retail and wholesale model, generating revenue through used vehicle sales, financing via CarMax Auto Finance, and ancillary services such as reconditioning and auctions.
• It targets retail consumers seeking used vehicles across the United States, serving a broad customer base through a network of stores and digital channels.

CarMax is a retailer of used vehicles in the United States, leveraging a nationwide footprint and a multi-channel sales approach to drive scale and operational efficiency. The company offers customers a broad range of vehicles and flexible financing options, supported by auction and reconditioning capabilities.

What this transaction means for investors

BML Capital’s buy elevates CarMax into one of the most concentrated bets in a portfolio largely dominated by early-stage biotech and asymmetric growth names. A 5% allocation to a scaled, cash-generative retailer is not dabbling; it’s a structural choice.

Still, CarMax enters this moment under pressure. Third-quarter results showed retail used unit sales down 8% year over year, comparable sales off 9%, and earnings per share falling to $0.43 from $0.81 a year earlier. Gross profit per retail unit declined modestly to $2,235, while wholesale margins were hit harder by vehicle price depreciation.

Despite softer volumes, CarMax generated $590 million in gross profit and $174.7 million in income from CarMax Auto Finance, which grew more than 9% year over year and continues to anchor profitability. Management is targeting at least $150 million in SG&A run-rate savings by fiscal 2027, while continuing aggressive buybacks. The company repurchased $201.6 million of stock in the quarter alone. So while it might be a tough time for CarMax, BML clearly sees an opportunity, and there are signs the firm is onto something.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Atea Pharmaceuticals and CarMax. The Motley Fool has a disclosure policy.