Investment management company Vulcan Value Partners recently released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The third quarter was a good one for the portfolios. The absolute performance was positive across all the strategies, while the relative performance lagged. In the quarter, the Large Cap Composite returned 4.6% net of fees and expenses, the Small Cap Composite returned 4.1% net, the Focus Composite returned 3.7% net, the Focus Plus composite returned 3.7% and the All-Cap Composite returned 5.5% net. For more information on the fund’s best picks in 2025, please check its top five holdings.
In its third-quarter 2025 investor letter, Vulcan Value Partners highlighted stocks such as CarMax, Inc. (NYSE:KMX). CarMax, Inc. (NYSE:KMX) is a used vehicle retailer headquartered in Richmond, Virginia. The one-month return of CarMax, Inc. (NYSE:KMX) was -25.97%, and its shares lost 40.87% of their value over the last 52 weeks. On October 15, 2025, CarMax, Inc. (NYSE:KMX) stock closed at $44.42 per share, with a market capitalization of $6.523 billion.
Vulcan Value Partners stated the following regarding CarMax, Inc. (NYSE:KMX) in its third quarter 2025 investor letter:
“There was one material detractor to performance: CarMax, Inc. (NYSE:KMX). CarMax is the largest used car retailer in the U.S. The company also has the third largest wholesale business in the U.S. and a large captive finance business. The used car industry is still feeling the effects of COVID and the resulting inflation. This was evident in CarMax’s second quarter results, during which the company’s retail volumes declined by 5%. The weak volume performance in the quarter was due to the continued abnormal volatility in used car prices as well as demand that had been pulled forward into the first quarter as consumers reacted in anticipation of the early April tariff announcements. On a year-to-date basis through the second quarter, CarMax’s volumes and profits are both up year over year. Although the used car market and CarMax’s results may remain bumpy in the short-term, we believe CarMax is a very good business with favorable long-term prospects. We believe that CarMax’s customer experience, brand, scale, vertical integration, and omnichannel approach are competitive advantages that will enable them to continue taking market share in a highly fragmented market. While the company is currently under earning, we believe it is well positioned to grow volumes, leverage fixed costs, and substantially increase earnings as the market normalizes. The company has a solid balance sheet, produces significant free cash flow, and is currently buying back shares. Our value remains stable. We followed our discipline and added to the position.”
