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Is CarMax (KMX) A Smart Long-Term Buy?

·3 min read

Weitz Investment Management, an investment management firm, published its “Hickory Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of +8.71% was recorded by the fund in the first quarter of 2021, outperforming its Russell Midcap benchmark that delivered an +8.14% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Weitz Investment Management, in its Q1 2021 investor letter, mentioned CarMax, Inc. (NYSE: KMX), and shared their insights on the company. CarMax, Inc. is a Richmond, Virginia-based used vehicle retailer that currently has a $19 billion market capitalization. Since the beginning of the year, KMX delivered a 23.52% return, extending its 12-month gains to 43.08%. As of May 21, 2021, the stock closed at $116.68 per share.

Here is what Weitz Investment Management has to say about CarMax, Inc. in its Q1 2021 investor letter:

"Beyond the benefit of 'reopening,' gains were led by companies experiencing positive, company-specific developments. Used car dealer CarMax was our top contributor, as the nationwide roll-out of its omnichannel car buying experience (at a dealership, online, or a combination of the two) continues to win fans in the form of new customers and investors alike."

Our calculations show that CarMax, Inc. (NYSE: KMX) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, CarMax, Inc. was in 46 hedge fund portfolios. KMX delivered a -3.82% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

Disclosure: None. This article is originally published at Insider Monkey.