Starboard Value has amassed a stake of approximately $350 million in CarMax (NYSE:KMX), signaling a major activist push to revitalize the nation’s largest used-car retailer.
The hedge fund, led by Jeff Smith, confirmed Wednesday that it has nominated Smith and Frontdoor CEO Bill Cobb to the CarMax board, according to a statement following earlier reports.
The move comes as CarMax struggles to maintain its market dominance against digital-native rivals like Carvana.
While CarMax shares have fallen roughly 42% over the past year, Starboard argues that the company’s "omnichannel" model—which pairs more than 250 physical locations with online sales—remains fundamentally superior to pure-play digital competitors.
Starboard expressed strong support for incoming CEO Keith Barr, the former InterContinental Hotels Group chief who officially takes the helm on March 16.
In a letter to Barr, Smith highlighted an opportunity to unlock value by reducing administrative and overhead expenses by more than $300 million.
The activist is also pushing for more efficient vehicle refurbishment and the adoption of "dynamic pricing" to regain lost market share.
Following the disclosure, CarMax shares rose as much as 6% in early Wednesday trading.