Performance Summary - The Saga Portfolio achieved a net increase of 44.2% in 2025, significantly outperforming the S&P 500 Index, which increased by 17.9% [2] - Since its inception on January 1, 2017, the Saga Portfolio has delivered a cumulative return of 417.9% net of fees, compared to the S&P 500's 259.2% [2] - The annualized return for the Saga Portfolio since inception is 20.1% net of fees, while the S&P 500's annualized return is 15.3% [2] Yearly Performance Breakdown - In 2025, the Saga Portfolio had a gross return of 46.4% and a net return of 44.2% [4] - The cumulative performance from 2017 to 2025 shows the Saga Portfolio with a gross return of 492.9% and a net return of 417.9%, while the S&P 500 had a gross return of 259.2% [4] - The annualized returns for the Saga Portfolio from 2019 to 2025 is 24.0%, ranking it 4th among approximately 1,500 U.S.-focused mutual funds [44] Investment Philosophy - The Saga Portfolio emphasizes long-term investment strategies, focusing on understanding how businesses create value over time rather than short-term stock price predictions [8][10] - The portfolio is structured to endure market volatility without being forced into poor decisions, avoiding margin, options strategies, and short selling [19] - The investment approach prioritizes explanations of business value creation over easy-to-vary narratives that may not hold under scrutiny [14][15] Case Studies - Carvana is highlighted as a case where the market's expectations were initially low compared to the underlying business mechanism, which showed potential for improvement over time [31] - GoodRx serves as a counterexample where the investment thesis was broken due to changes in industry structure, leading to a timely exit from the position [36][37] Market Context - The report discusses the challenges of active investing, noting that 95.5% of actively managed U.S. equity mutual funds underperformed their benchmarks over the past ten years [20] - It emphasizes that long-term stock returns are skewed, with a small number of stocks driving most wealth creation, while many stocks deliver ordinary results [22] - The portfolio management approach is designed to navigate the complexities of market sentiment and investor behavior, focusing on long-term value rather than short-term fluctuations [56][58]

Core Viewpoint - Uxin Limited has officially opened its sixth used car superstore in Tianjin, enhancing its retail operations in Northern China and integrating a reconditioning factory with a showroom for over 3,000 vehicles [1][2]. Group 1: Company Expansion - The Tianjin superstore is part of Uxin's strategy to scale its used car retail operations, leveraging Tianjin's strong automotive industry focus and logistics infrastructure [2]. - Uxin plans to open four to six new superstores in 2026, indicating a commitment to growth in sales and operational performance [3]. Group 2: Industry Context - Tianjin, with a population exceeding 13 million and around 4 million registered vehicles, is recognized as a key municipality for China's automotive industry development [2]. - The city has prioritized the automotive sector as one of its twelve key industrial value chains, aiming for high-end and high-quality development [2]. Group 3: Company Overview - Uxin is positioned as a leading used car retailer in China, focusing on advanced production, new retail experiences, and digital empowerment [4]. - The company emphasizes a customer-centric approach, offering high-quality vehicles and superior after-sales services through a reliable transaction experience [4].

Core Insights - The newly appointed CEO of CarMax, Keith Barr, has outlined three key priorities for the fiscal year 2027, focusing on enhancing e-commerce technology to improve efficiency and customer experience, and to compete with rivals like Carvana [1][2] Group 1: CEO's Priorities - The first priority is to update CarMax's e-commerce technology to enhance customer experience and operational efficiency [1][2] - The second priority is to make CarMax "the obvious choice" for consumers by offering fair prices, quick access to a large selection of vehicles, and an exceptional user experience [3] - The third priority is to "act with urgency and intention," indicating a commitment to change ineffective practices and reinforce successful strategies [3] Group 2: Technology Focus - Barr's emphasis on technology is influenced by his previous experience in the hospitality industry, where he modernized technology and improved customer experience at InterContinental Hotels Group [4][5] - Concerns have been raised by a major shareholder, Starboard Value LP, regarding CarMax's digital trade-in process, which is seen as cumbersome compared to competitors [6][7] - Starboard Value suggests that simplifying the digital offer process could help CarMax capture a larger share of online sellers, emphasizing the need for a more user-friendly digital interface [8]

Group 1 - CarMax appointed Keith Barr as president and CEO effective March 16, succeeding David McCreight, who will return to his role as an independent director of the board [1][3] - Tom Folliard will continue as interim executive chair of the board until the annual meeting in June, after which he is expected to resume his role as non-executive chair [3] - Barr previously served as CEO of InterContinental Hotels Group, overseeing significant technological advancements and operational efficiencies during his tenure [4][5] Group 2 - Barr emphasized CarMax's unique position to capture market opportunities through value and service across in-person and online channels, leveraging transparent pricing and extensive inventory [6] - CarMax is the largest retailer of used vehicles in the U.S., with over 250 store locations and 28,000 employees, selling approximately 790,000 used vehicles and 540,000 wholesale vehicles in the fiscal year ending February 28, 2025 [6] - The CarMax Auto Finance unit originated over $8 billion in auto loans during the same fiscal period [6]

Core Insights - Carvana's stock has experienced significant volatility, resembling a roller coaster, particularly due to past financial struggles including massive debt and poor inventory management [1][2] - The company has made a remarkable recovery, achieving record financial performance and positioning itself for future growth [2][3] Financial Performance - In the last year, Carvana sold a record 596,641 retail units, marking a 43% increase from the previous year [4] - Full-year revenue reached $20.3 billion, a 49% increase compared to the prior year [4] - Net income for the year rose to $1.9 billion, an increase of over $1 billion from the previous year [4] Growth Strategy - Historically, Carvana has shown strong growth, with previous quarters reporting triple-digit increases in retail units sold [5] - The company is now focusing on profitable growth, with plans to enhance its reconditioning and digital auction capabilities while driving significant growth in retail units sold and adjusted EBITDA [6]

Core Viewpoint - Optimist Fund remains optimistic about its portfolio's long-term performance despite a decline of 8.5% in Q4 2025, believing current valuations underestimate future earnings and cash flow [1] Group 1: Fund Performance - In Q4 2025, Optimist Fund experienced a decline of 8.5% [1] - The Fund aims for capital growth at a rate in the mid-teens or higher over several decades [1] - The Fund's investment strategy is based on a five-year perspective, focusing on long-term performance [1] Group 2: Carvana Co. (NYSE:CVNA) Overview - Carvana Co. is a US-based used car retailer with a market capitalization of $73.958 billion [2] - As of February 26, 2026, Carvana's stock closed at $353.90 per share, with a one-month return of -16.01% and a 52-week gain of 44.53% [2] - Carvana reported record third-quarter results, selling 155,941 retail cars (+~44% YoY) and generating total revenue of ~$5.65 billion (+~55% YoY) [3] Group 3: Financial Performance - Carvana's adjusted EBITDA for Q3 was approximately $637 million (+~50%), with an adjusted EBITDA margin of ~11.3% [3] - In Q4 2025, Carvana reported revenue of $5.603 billion, marking a 58% increase from Q4 2024 [4] Group 4: Hedge Fund Interest - Carvana Co. was held by 100 hedge fund portfolios at the end of Q4 2025, down from 109 in the previous quarter [4] - Despite its potential, the company is not among the 30 most popular stocks among hedge funds [4]

Core Viewpoint - Carvana's stock has experienced significant volatility, with a recent decline of approximately 27% from its January peak, indicating potential challenges ahead as used car demand shows signs of weakening [1][10]. Company Performance - Carvana's revenue for Q3 2025 reached a record $5.65 billion, reflecting a year-over-year increase of 54.5%, with 156,000 vehicles delivered, showcasing a remarkable turnaround from near-bankruptcy in 2022 [5][4]. - Despite impressive past performance, the company's valuation appears stretched, and cash-flow trends are weakening, raising concerns about sustainability [10]. Market Dynamics - The demand for used cars is projected to decline, with retail sales expected to fall by 0.7% in 2026 to 20.3 million units due to lower new car production and weak electric vehicle demand [6]. - Average used car prices have increased to $28,550 in January 2026, up $490 year over year, which may challenge affordability for consumers [6]. Financing Environment - Financing costs for used cars are significantly higher, with loan rates between 10% to 12% APR compared to 6% to 7% for new cars, which could deter potential buyers and impact Carvana's growth [7][10]. - The increasing cost of financing makes the value proposition of used cars less attractive, especially when compared to new cars with promotional rates [7]. Insider Activity - There are concerning signs from insider trading, with CEO Ernest Garcia III selling over $1.4 billion in shares since April 2024, including more than $500 million in August 2025, raising agency risk concerns due to the Garcia family's control of 84% of voting power [9][10]. Regulatory and Legal Issues - Gotham City Research has accused Carvana of concealing over $1 billion in expenses through related-party transactions, which led to a significant drop in stock price [10]. Consumer Behavior - The market for buying used cars online has not yet become a habitual choice for consumers, making it a more considered purchase, especially in a high-interest rate environment [11].

Core Viewpoint - The used-car retailer has appointed Keith Barr, a veteran from IHG Hotels & Resorts, as its new CEO [1] Group 1 - The appointment of Keith Barr is expected to bring significant leadership experience to the company [1] - Keith Barr's background in the hospitality industry may provide a fresh perspective on customer service and operational efficiency for the used-car retailer [1] - The transition in leadership comes as the company seeks to enhance its market position and drive growth [1]

Core Viewpoint - Uxin Limited has entered into definitive share subscription agreements with NIO Capital and Prestige Shine Group Limited, raising a total of US$50 million through the issuance of Class A ordinary shares [1][2]. Group 1: Investment Details - The company will issue 5,246,589,717 Class A ordinary shares at a price of US$0.00953 per share, equivalent to US$2.859 per American depositary share [2]. - NIO Capital will invest US$20 million, while Prestige Shine Group Limited will invest US$30 million as part of the agreement [2]. Group 2: Company Strategy and Future Plans - The proceeds from this financing are expected to support the launch of four to six new superstores in 2026, enhancing the company's financial resilience [3]. - The company aims to continue executing its established strategy, expanding operations, and strengthening its position in China's used car retail market [3]. Group 3: Company Overview - Uxin is recognized as China's leading used car retailer, focusing on industry transformation through advanced production and digital empowerment [4]. - The company offers a one-stop transaction experience with high-quality vehicles and superior after-sales services, leveraging an omni-channel strategy [4]. - Uxin has developed strong management and operational capabilities in the used car sector over more than ten years of operation [4].

Financial Data and Key Metrics Changes - Retail transaction volume reached 14,020 units, representing a 134% year-over-year increase and a 35% quarter-over-quarter increase [4][14] - Retail revenue for the quarter totaled CNY 820 million, up 84% year-over-year and 35% quarter-over-quarter [15] - Gross margin for the quarter was 7.5%, up 0.5 percentage points year-over-year and up 2.3 percentage points quarter-over-quarter, marking the highest level in three years [18] - Adjusted EBITDA loss narrowed significantly to CNY 5.3 million, representing a 43% reduction year-over-year and a 68% reduction quarter-over-quarter [19] Business Line Data and Key Metrics Changes - Wholesale transaction volume was 1,884 units, representing an 81% increase year-over-year and a 54% increase quarter-over-quarter [17] - Total revenue combining both retail and wholesale reached CNY 879 million, representing a 77% increase year-over-year and a 34% increase quarter-over-quarter [17] Market Data and Key Metrics Changes - The Wuhan superstore, which opened in February, is expected to reach nearly 1,800 retail units in December, with local market share approaching 10% [5] - The Zhengzhou superstore, opened in late September, is expected to achieve approximately 900 retail units in December, with market share nearing 5% [5] Company Strategy and Development Direction - The company is expanding its superstore network, having completed all three new superstore openings planned for 2025, and plans to open four to six additional superstores in 2026 [8] - The company aims to scale its business model nationwide, driven by precise pricing, higher customer satisfaction, and superior operating efficiency [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained and rapid growth, expecting retail transaction volume to exceed 18,500 units in Q4 2025, representing year-over-year growth of over 110% [11][20] - For the full year 2025, retail transaction volume is expected to surpass 50,000 units, reflecting year-over-year growth of over 130% [11][20] Other Important Information - The company has established strategic partnerships with local governments in Tianjin, Guangzhou, and Yinchuan to jointly invest in and operate new used car superstores [8] Q&A Session Summary Question: How does management view the sustainability of the current margin level? - Management indicated that the gross margin of 7.5% is supported by stabilized new car pricing and improved profitability at the Wuhan superstore, with expectations for further margin expansion [22][23][25] Question: What key initiatives drove the outperformance of the Zhengzhou superstore? - Management attributed the outperformance to lessons learned from the Wuhan superstore, improved pricing capabilities, and efficient operations, expecting break-even in about nine months [28][29][30] Question: What are the key similarities and differences between Uxin and Carvana? - Management highlighted that Uxin operates through both offline superstores and an online marketplace, while Carvana primarily sells online, reflecting different market realities [33][34] - Both companies share similarities in operating under an own inventory model and focusing on precise pricing to ensure efficient vehicle turnover [35][36][37]