CarMax is barely making money this year and its stock is down 87% since its February 1997 offering.
CarMax, the used-car dealer owned by Circuit City, the consumer electronics chain, has a tracking stock.
CarMax was hobbled with a bunch of giant, moneylosing stores it had opened with inexperienced managers.
With AutoNation out of the picture, Ligon halted growth so he could get CarMax healthy.
Largely absent from the northern half of the country, CarMax has room to grow.
In addition to picking up Kraft and Glaxo, Berkshire fattened its stake in CarMax.
To scrub every last whiff of sleaze from the used-car business, CarMax makes its sticker prices fixed.
CarMax and AutoNation engaged in a mortal expansion battle in the late 1990s.
One reason: an ill-advised move in the late 1990s into home appliances and even used cars, via online peddler CarMax.
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In 2002, after CarMax began to see a profit, it was spun off from Circuit City and started adding outlets again.
Finally, the internet craze made it hard for Carmax's brand to stand out as others rushed to sell used cars online.
CarMax Inc. ( KMX) reports its earnings before the opening on Thursday.
CarMax (KMX) reports its third quarter earnings on Thursday, December 20, 2012.
As CarMax was struggling, along came AutoNation, the giant new-car dealership group, with a plan to compete with CarMax head-to-head in used cars.
Buffett also zeroed out his holdings in Iron Mountain ( IRM), CarMax ( KMX), NRG Energy ( NRG) and Home Depot ( HD).
In addition to picking up Kraft and Glaxo, Berkshire fattened its stake in CarMax (nyse: KMX - news - people ).
Even now, at 20 times earnings, CarMax remains attractive, Gray says.
As CarMax had done for automobiles and as eBay had done for old furniture in the attic, the online exchange could consolidate the splintered health-insurance market.
Analysts are expecting CarMax to report earnings of 39 cents per share, up 8.3% from a year ago when it reported earnings of 36 cents per share.
Gray reasoned that Carmax, with nine years of experience running its stores and a record of solid profitability, ought to be the leader in this emerging business.
But the wholesale auctions left CarMax with too many quickly depreciating, dime-a-dozen, one-year-old Ford Tauruses out of rental fleets and not enough of the low-mileage, five-year-old Honda Accords used-car drivers dream about.
Ivan Feinseth, research director at Matrix USA, says more bad news is to come because of the slowdown in auto sales and increased competition from big guys like AutoNation and CarMax .
But the wholesale auctions left CarMax with too many quickly depreciating, dime-a-dozen, one-year-old Ford (nyse: F - news - people ) Tauruses out of rental fleets and not enough of the low-mileage, five-year-old Honda (nyse: HMC - news - people ) Accords used-car drivers dream about.
Ivan Feinseth, research director at Matrix USA, says more bad news is to come because of the slowdown in auto sales and increased competition from big guys like AutoNation (nyse: AN - news - people ) and CarMax (nyse: KMX - news - people ) .
Last year 44 million used cars traded hands (new-car sales were 17 million), 37% at new-car dealerships, 32% at used-car lots and the rest privately. (CarMax buys half of the cars it sells from individuals, the rest at auction or from other dealers.) Companies like AutoNation, Asbury Automotive and privately held Wickland Oil have tried to copy CarMax, but none has lasted.
Last year 44 million used cars traded hands (new-car sales were 17 million), 37% at new-car dealerships, 32% at used-car lots and the rest privately. (CarMax buys half of the cars it sells from individuals, the rest at auction or from other dealers.) Companies like AutoNation (nyse: AN - news - people ), Asbury Automotive and privately held Wickland Oil have tried to copy CarMax, but none has lasted.
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