News
Activist Investing · Board Governance · CarMax · Retail Turnaround
Activist investor Starboard Value amassed a $350 million stake in CarMax Inc., nominating its CEO Jeff Smith and Bill Cobb to the board, aiming to accelerate the used car retailer's turnaround under incoming CEO Keith Barr.
Starboard supports Barr, who starts this month, and sees him as a catalyst for change, citing positive engagement with the company. Starboard believes CarMax, a leader in its space, became complacent, but its asset base is attractive, effectively acquired at tangible book value.
Starboard identifies opportunities to boost performance by improving customer experience, refurbishing vehicles more efficiently, reducing administrative and overhead expenses by over $300 million, and implementing dynamic pricing. Starboard's experience with Cars.com Inc.
and Ritchie Bros. Auctioneers (now RB Global Inc.) informs its strategy.
Barr's digital transformation experience at InterContinental Hotels Group is also seen as valuable. CarMax's shares were down 41% in the past year, compared to an 80% gain for Carvana and 14% for AutoNation Inc.
CarMax's executive chair, Tom Folliard, stated engagement with Starboard has been productive.
