Core Insights - Vulcan Value Partners reported positive absolute performance across all strategies in Q3 2025, with the All-Cap Composite leading at 5.5% net return [1] - The investor letter highlighted CarMax, Inc. as a significant detractor to performance, with a one-month return of -25.97% and a 52-week loss of 40.87% [2][3] Company Performance - CarMax, Inc. is the largest used car retailer in the U.S. and has the third largest wholesale business [3] - The company experienced a 5% decline in retail volumes during Q2 2025, attributed to volatility in used car prices and demand shifts due to tariff announcements [3] - Year-to-date, CarMax's volumes and profits are up year over year, indicating potential for recovery [3] Market Outlook - Despite short-term challenges, CarMax is viewed as a strong business with favorable long-term prospects due to its competitive advantages such as customer experience, brand strength, scale, vertical integration, and omnichannel approach [3] - The company is currently under earning but is well-positioned to grow volumes and increase earnings as the market normalizes [3] - CarMax maintains a solid balance sheet, generates significant free cash flow, and is actively buying back shares, indicating confidence in its value [3]

Investment Performance Summary - The Large Cap Composite (Gross) achieved a quarterly return of 4.7% and a year-to-date return of 10.0% [3][10] - The Small Cap Composite (Gross) reported a quarterly return of 4.3% and a year-to-date return of 6.6% [16] - The Focus Composite (Gross) had a quarterly return of 3.8% and a year-to-date return of 7.3% [20] - The All Cap Composite (Gross) recorded a quarterly return of 5.7% and a year-to-date return of 9.9% [29] Company Contributions and Detractors - Medpace Holdings Inc. was a significant contributor to performance, with revenue growing at a mid-teens rate and operating earnings up 20% year-over-year [13][33] - Alphabet Inc. also contributed positively, benefiting from a favorable remedies decision in an antitrust case [14][34] - CarMax Inc. was identified as a material detractor, experiencing a 5% decline in retail volumes due to market volatility [15][19] Strategic Actions - Fiserv Inc. was purchased during the quarter, expected to generate over $5 billion in free cash flow, which will be used for share repurchases [11][31] - CBRE Group Inc. was sold to reallocate capital to more discounted businesses, despite its strong market position [12][32] - No new positions were added in the Small Cap and Focus strategies during the quarter [17][21] Market Conditions and Outlook - Stock price volatility was noted earlier in the year due to tariff-related concerns, leading to capital allocation towards stable value companies [8] - The overall market is perceived as not cheap, but the portfolios maintain a margin of safety with attractive price-to-value ratios [9][10] - The used car market remains volatile, but CarMax is expected to leverage its competitive advantages for long-term growth [15][19]

Group 1 - CarMax Inc reported second-quarter earnings per share of 64 cents, missing the analyst consensus estimate of $1.09 [1] - Quarterly sales were $6.594 billion, down 6% year over year, and also missed the expected $7.024 billion [1] - The company purchased a total of 293,000 vehicles in the second quarter, a 2.4% decrease from the previous year [1] Group 2 - CEO Bill Nash expressed confidence in the long-term strategy and earnings model despite the challenging quarter [2] - Following the earnings announcement, CarMax shares fell 0.4% to $45.41 [2] Group 3 - Needham analyst Chris Pierce maintained a Buy rating but lowered the price target from $92 to $60 [4] - Evercore ISI Group analyst Michael Montani downgraded CarMax from Outperform to In-Line, cutting the price target from $80 to $52 [4] - Baird analyst Craig Kennison maintained an Outperform rating and lowered the price target from $90 to $60 [4] - RBC Capital analyst Steven Shemesh maintained an Outperform rating and reduced the price target from $81 to $59 [4] - Truist Securities analyst Scot Ciccarelli maintained a Hold rating and lowered the price target from $74 to $47 [4]

Core Insights - Uxin Limited, a leading used car retailer in China, is set to open a new used car superstore in Zhengzhou, Henan Province on September 27, 2025, marking its fourth superstore launch in major Chinese cities [1][4]. Group 1: Superstore Details - The Zhengzhou superstore will cover approximately 150,000 square meters and will feature one of China's largest used car showrooms along with an in-house reconditioning facility [2]. - The facility is designed to display and sell up to 5,000 vehicles, showcasing Uxin's ability to replicate and scale its business model effectively [2][4]. Group 2: Market Context - Zhengzhou, the capital of Henan Province, has a resident population exceeding 13 million and over 5 million registered vehicles, ranking among the top ten cities in China for used car transactions [3]. - The city serves as a key transportation hub in central China, providing a strong foundation for the operation of a large-scale used car superstore [3]. Group 3: Strategic Implications - The opening of the Zhengzhou superstore is expected to enhance Uxin's market penetration in central China and provide a wider selection of high-quality vehicles and professional services to regional consumers [4]. - The continued rollout of new superstores is anticipated to be a significant growth driver for Uxin's sales volume and financial performance in the coming years [4]. Group 4: Company Overview - Uxin is committed to transforming the used car industry in China through advanced production, new retail experiences, and digital empowerment, offering high-quality vehicles and superior after-sales services [5]. - The company operates under an omni-channel strategy, leveraging its online platform and offline superstores with inventory capacities ranging from 2,000 to 8,000 vehicles [5].

Market Overview - The U.S. stock market is experiencing a notable pullback, with major indexes extending losses for a third consecutive session, driven by profit-taking and concerns over equity valuations [1][2] - Afternoon trading reflects a cautious mood as market participants digest economic data and corporate news [1] Market Indexes Performance - The Dow Jones Industrial Average (DJIA) was down approximately 0.2%, or 76 points, closing at 46,121.28 [2] - The S&P 500 (SPX) slipped between 0.4% and 0.7%, heading towards its longest slide in over a month, after falling to 6,637.97 [2] - The Nasdaq Composite (IXIC) traded 0.3% to 0.7% lower, following a dip to 22,497.86 [2] Sector Performance - Mixed performance across sectors, with profit-taking evident in the technology segment; seven out of 11 sectors in the S&P 500 ended in negative territory [3] - The Energy Select Sector SPDR (XLE) advanced 1.3%, while the Materials Select Sector SPDR (XLB) and Real Estate Select Sector SPDR (XLRE) saw declines of 1.2% and 1%, respectively [3] Copper Market Impact - A surge in copper prices is noted after Freeport-McMoRan declared force majeure on supplies from its Grasberg mine due to a fatal mudslide, causing copper prices to rise by 1.1% [4] - Shares of copper producers like Anglo-American and Glencore saw gains due to this supply disruption [4] Homebuilders Performance - Homebuilders like Lennar (LEN) and D.R. Horton (DHI) are experiencing gains, attributed to a 20.5% surge in U.S. sales of new homes in August 2025, reaching an annual rate of 800,000 units [5] Upcoming Economic Data - Key U.S. inflation data (PCE) is anticipated, which could significantly influence market direction [6] - Weekly jobless claims data and the latest GDP estimate are also set to be released, providing insights into the labor market and economic health [6] Federal Reserve Commentary - Federal Reserve Chair Jerome Powell's remarks on equity prices being "fairly highly valued" and a measured approach to interest rate cuts continue to weigh on investor sentiment [7] - Stronger-than-expected economic reports may reduce the urgency for aggressive rate reductions [7] Corporate Earnings Reports - Notable companies like Costco Wholesale (COST), Accenture (ACN), and CarMax (KMX) are scheduled to report fiscal fourth-quarter results, which will be closely watched for insights into consumer spending [8][9] Individual Stock Movements - Technology stocks, particularly in the AI space, are facing profit-taking; Nvidia (NVDA) shares fell 0.8% and Oracle (ORCL) fell 1.7% due to valuation concerns [10] - Intel (INTC) shares rose over 5% on news of seeking investment from Apple, while IBM (IBM) rose more than 5% following positive trial results using its quantum computing technology [11] - Starbucks (SBUX) shares slipped almost 1% due to layoffs and store closures, while CarMax (KMX) tumbled 19.8% after reporting weaker-than-expected profits [12] - Lithium Americas (LAC) soared 95.8% on reports of potential U.S. government investment in its lithium project [13] Market Environment - The market is navigating a complex environment characterized by a resilient economy, cautious Federal Reserve, and re-evaluation of high-growth stock valuations [14]

Interest Rate Outlook - Fed Chair Jerome Powell expressed caution regarding lower interest rates, following a rate-cutting stance from two fellow Fed governors earlier in the week [2][3] - The federal funds rate has been relatively high, ranging from 3.13% to 5.38% between September 2022 and September 2024, as the Fed attempts to control inflation [4] Market Reaction - Stock prices fell, with the S&P 500 and Nasdaq Composite both declining by 0.3%, and the Dow Jones Industrial Average retreating by 0.4% [3] - Stock futures for major indices are slightly down ahead of the market open [5] Economic Indicators - Initial jobless claims for the week of September 20 are expected to rise to 235,000 from 231,000 in the prior week [6] - Existing home sales are projected to decrease to 3.96 million in August from 4.01 million in July [6] - Corporate earnings reports are anticipated, with Costco expected to report EPS of $5.81 for the August quarter, up from $5.29 in the prior year [6] and Accenture's consensus EPS estimate at $2.98, up from $2.66 [6] Company Earnings Expectations - CarMax is expected to report EPS of $1.03 for the August quarter, an increase from $0.85 in the same period last year [7]

Core Insights - CarMax has been recognized for the 11th consecutive year in Fortune magazine's 2025 Best Workplaces in Retail™, ranking 6 in the large company category [1] - The company was also honored by Great Place To Work® and PEOPLE magazine as one of the 2025 PEOPLE® Companies that Care, ranking 38, marking its fifth appearance on this list [1] - These accolades reflect CarMax's commitment to a people-first culture and its dedication to community support [1][2] Awards and Recognition - CarMax has been recognized in multiple categories, including: - Fortune's "100 Best Companies to Work For®" for 21 consecutive years, ranked 69th in 2025 [9] - US Veteran's and Military Magazine's "Top Veteran-Friendly Employer" [9] - Military Friendly designation for its commitment to the military community [9] - Top Workplaces recognition by the Atlanta Journal-Constitution and Richmond Times-Dispatch based on employee feedback [9] Company Culture - CarMax emphasizes a supportive and welcoming environment, driven by a people-first culture [2][10] - The company offers extensive career paths, training, and support for associate growth, highlighting its integrity and community impact [10] - CarMax's innovative approach to employee investment is seen as a driver of productivity and revenue [4]

Core Viewpoint - Uxin Limited, a leading used car retailer in China, is set to announce its financial results for the second quarter of 2025 on September 29, 2025, before the U.S. market opens [1] Company Summary - Uxin Limited is identified as China's leading used car retailer [1] - The financial results will cover the period ending June 30, 2025 [1] - The announcement is scheduled to occur before the U.S. market opens on September 29, 2025 [1]

Core Viewpoint - Uxin Limited, a leading used car retailer in China, announced a significant leadership change with the appointment of a new executive [1] Company Summary - Uxin Limited is recognized as China's leading used car retailer, indicating a strong market position within the automotive industry [1] - The announcement of a new executive suggests potential strategic shifts or initiatives that may impact the company's operations and market performance [1]

Core Insights - Uxin Limited, a leading used car retailer in China, announced a significant leadership change with the appointment of Mr. [1] Group 1 - Uxin Limited is recognized as China's leading used car retailer [1]