jeudi 18 janvier 2018

A return on Carmax (KMX)

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.

4 commentaires:

  1. an other great investor, as good as AKre that have a shit load of KMX stock is Gayner from Markel (his top position).
    I'm not a fan of KMX business but if they all agree that's a compounder i tend to believe theme.
    Hope it won't be a confirmation bias that'll turn like Valeant.

  2. With the ongoing interst hike and the end of a bull market, why just use the extra from the income to pay a bit more the mortgage and/ or the credit line?

  3. Do any of you know if the man who moves markets is reading these boards lately or off on some winter vacation to a place less cold than Canada (like Siberia)? I'm talking about Jason Del Vicario. I do not even own a TV set, but I do believe he was on BNN Monday night and he recommended CCL, The Morningstar International Moat ETF (both amazing picks) and LASTLY...he recommended a penny stock with a market cap below $50 million called Sangoma Technologies. I have had my eye on that penny stock for months and was just getting ready to buy when Jason goes on BNN and the next day it opens 15% higher than it's previous day close. I'm not sure whether to curse him or thank him. In the end, it was the kick in the ass that I needed to finally buy this stock. Because of my gullible nature, I paid ALMOST 12x next year earnings (I'm looking at Yahoo Finance Statistics for STC.v to get this figure). I'm sure Jason got in for 10x next year earnings. But this little stock is a compounding machine. It has done six buy-outs in six years. It's just growing and growing. I know many of you are laughing at us for buying penny stocks. They do not have the ROE or the economic moats of the great companies that dominate their fields. But I'm going out on a limb and predicting a huge winner for Jason. Who knows, maybe some day Jason will be every bit as famous as Jason...Donville.

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