My three main influences as investors own shares of Carmax. I'm talking about Chuck Akre (again), Sequoia Fund and Giverny Capital. An important stake of each portfolio is occupied by that stock (5% or more).
I've written a few times about that stock in the past, saying I wasn't particularly fond of it. I never hated KMX, but I thought that many better stocks were avalaible.
Given the fact that my three idols have a lot of money in that stock and given the fact that KMX is considered a "compounding machine" by Chuck Akre, I can't maintain my position. That stock is surely at least good... and perhaps more.
I've learned not to follow blindly any investor. So, I went to Value Line to take a look at KMX.
For the earnings predictability, KMX has a score of 95%, which is almost perfect. And it's an indicator that seems very important for Sequoia, Akre and Rochon (Giverny). In fact, most of the best companies have a high score for earnings predictability.
The ROE of KMX has been around 20% for the last 3 years, which is very good.
And, finally, in an expensive market, KMX has rarely been this cheap (about 16 times forward earnings). Just take a look at the PE for the last years and you'll see that this stock is usually selling for something like 20 times earnings and even more.
The last results for KMX have been disapointing but if someone is looking for a good company and a fair price, he should be looking there. I don't think that there's a lot of momentum with KMX but there's an occasion to share ownership with three of the best investors in the world. I trust them when they're alone. When they're together, I trust them like a kind of holy trinity.