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Classified as initial_thesis because this is the first public Starboard letter following the CEO transition; could also be read as follow_up if part of a longer existing campaign — folder context suggests this is the opening salvo to the new CEO.", "kpisCited": [ { "detail": "Approximately $350 million position, one of the largest shareholders", "metric": "Starboard investment in CarMax" }, { "detail": "~90% of CarMax's vehicle acquisitions come from customer trade-ins rather than auctions", "metric": "Consumer-sourced vehicle acquisitions" }, { "detail": "Opportunity to exceed $300 in per-unit savings through automation and prioritization", "metric": "Per-unit reconditioning savings" }, { "detail": "Modest reductions of ~$100 to $300 per vehicle combined with dynamic pricing", "metric": "Per-vehicle price reduction" }, { "detail": "Target 70%-75% of gross profit, preference toward 70% as expeditiously as possible", "metric": "SG&A as % of gross profit (target)" }, { "detail": "Publicly traded franchise auto dealers average ~71.9% of gross profit", "metric": "Peer SG&A as % of gross profit" }, { "detail": "~$42 per share, providing substantial downside protection", "metric": "Tangible book value per share" }, { "detail": "~$3 per share (Bloomberg consensus)", "metric": "FY2027E free cash flow per share" }, { "detail": "Currently trading at ~8x NTM EBITDA with substantial improvement opportunity", "metric": "NTM EBITDA multiple" } ], "closingAsk": "Move quickly to make meaningful and impactful decisions across buying, reconditioning, selling, pricing and SG&A to reactivate CarMax's scale flywheel.", "extraction": { "at": "2026-04-22 16:02:19+00", "model": "unknown-legacy", "runId": null, "seconds": 86.75582, "promptVersion": null }, "scqaReward": "Reactivating the scale flywheel through buying, reconditioning, selling, pricing and SG&A discipline can close the gap between current performance and long-term potential, expanding margins beyond the ~8x NTM EBITDA multiple while protecting the pristine balance sheet.", "thesisTypes": [ "operational_turnaround", "cost_cutting", "strategic_pivot" ], "top3Reasons": [ "Digital front-end friction is killing conversion despite top-of-funnel demand", "SG&A bloated to >75% of gross profit vs. ~71.9% peer average — zero-based reset needed", "Rigid per-unit gross-profit targets caused share losses in volatile 2025-2026 markets" ], "scqaSituation": "CarMax is the largest US used-car retailer with a differentiated omnichannel model, ~90% consumer-sourced inventory, ~$42/share tangible book, and a NPS-leading customer franchise — trading near book at ~8x NTM EBITDA.", "thesisSummary": "Starboard, a ~$350 million shareholder, congratulates incoming CEO Keith Barr and lays out an operational playbook for CarMax (KMX). 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