One Hundred Fifty-Five Thousand CarMax Shares Just Landed in a Major Fund's Portfolio—Here's Why

BML Capital Management made a strategic move in early February 2026 by acquiring 155,000 shares of CarMax during the fourth quarter, representing one of the fund’s most significant bets in recent quarters. The position, valued at approximately $5.99 million based on quarter-end pricing, signals growing confidence in the struggling retailer’s potential recovery despite steep recent declines in the stock market.

The Fund’s Contrarian Play on CarMax

When BML Capital revealed its SEC filing on February 2, the investment community took notice. This wasn’t a modest stake or a trial position—acquiring 155,000 shares of CarMax represented a meaningful 5.18% allocation of the fund’s reported assets under management. For a portfolio strategy that typically concentrates on early-stage biotech and asymmetric growth opportunities, this move toward a scaled, cash-generative retailer marked a notable strategic pivot.

The timing raised eyebrows given CarMax’s recent performance trajectory. Trading at $44.78 per share on the filing date, the stock had declined 46.84% over the preceding twelve months—a stark contrast to the S&P 500’s roughly 15% gain during the same period. Yet BML Capital’s decision to wade into these turbulent waters suggests management saw opportunity where others saw risk.

CarMax’s Portfolio Position and Top Holdings

Within BML Capital’s broader portfolio architecture, the CarMax position sits just outside the fund’s top five holdings after the quarter concluded. The portfolio landscape reveals a highly concentrated strategy:

• NASDAQ: ACRS commands $42.89 million (38.0% of assets under management)
• NASDAQ: AVIR accounts for $26.74 million (23.7% of assets under management)
• NASDAQ: ORMP represents $9.03 million (8.0% of assets under management)
• NASDAQ: TIL totals $7.10 million (6.3% of assets under management)
• NASDAQ: PMVP comprises $6.62 million (5.9% of assets under management)

By these metrics, the $5.99 million CarMax investment establishes a meaningful foothold—not a dabble, but a structural conviction in the company’s direction.

Understanding CarMax’s Current Business Performance

CarMax operates as the nation’s largest retailer of used vehicles, generating revenue through a diversified model spanning retail sales, in-house financing via CarMax Auto Finance, and ancillary services including vehicle reconditioning and auction operations. The company’s financial snapshot reveals both strengths and headwinds:

Key Financial Metrics:

• Revenue (trailing twelve months): $25.94 billion
• Net income (trailing twelve months): $457.84 million
• Market capitalization: $6.58 billion
• Stock price (February 2, 2026): $44.78

Third-quarter results, however, exposed operational pressures. Retail used vehicle unit sales contracted 8% year-over-year, while comparable sales slipped 9%. More concerning, earnings per share tumbled to $0.43 from $0.81 in the prior year period. Gross profit per retail vehicle declined modestly to $2,235, though wholesale operations faced sharper margin compression from vehicle price depreciation.

The Financing Division as Profit Anchor

Despite deteriorating retail volumes, CarMax generated $590 million in gross profit during the quarter and extracted $174.7 million from its financing operations—representing growth exceeding 9% year-over-year. This CarMax Auto Finance division emerges as a stabilizing force, continuing to anchor overall profitability as retail conditions remain strained.

Management’s forward guidance includes aggressive cost discipline: the company targets at least $150 million in selling, general, and administrative expense run-rate savings by fiscal 2027. Simultaneously, the company has maintained buyback momentum, repurchasing $201.6 million of stock during the latest quarter alone—a signal of capital confidence despite near-term headwinds.

What BML Capital’s Investment Thesis Likely Represents

The fundamental question becomes: why allocate 5% of portfolio assets to a retailer facing margin pressure, declining volumes, and a stock price down nearly 50%? The answer likely centers on three factors.

First, CarMax’s business generates substantial free cash flow, providing management with flexibility to fund capital returns while investing in operational improvement. Second, the company’s integrated model—combining retail sales, proprietary financing, and vehicle sourcing—creates competitive moats in the fragmented used-vehicle market. Third, current valuations may reflect peak pessimism about the used-vehicle market cycle, potentially overstating the company’s normalized earning power.

BML Capital’s willingness to deploy significant capital suggests conviction that turnaround efforts will gain traction, that cost discipline will meaningfully improve margins, and that financing operations will continue anchoring profitability through inevitable market cycles. Whether that conviction proves justified will depend on execution—and whether used-vehicle demand stabilizes before further deterioration tests management’s operational stamina.