Copart质量高且价格便宜；当前价格反映了周期性低点，使其具有吸引力。

Copart as well. So we'll also get an update on that.

a company that will show up in your inbox soon again because we already covered it once will be Copart. Um, Copart is sort of interesting because we just recorded the episode, so I feel like we should have a pretty good understanding of where to put it here.

Um, just maybe a bit of an update. I I think most people will know Copart. Um, they are they have many yachts as we all know in the basically on the entire North American continent. What they do is they're a marketplace for um for used cars. You could also say wreck cars. So basically the customers are insurance companies and when a car is um you know a total crash um basically the insurance company will give that car to Copart um and when I say they will give it to them copot is the one doing all the logistics they do the photos they list it on their marketplace and they sell it to um it could be you know private buyers but mostly um it's repair shops or something like that. Um that's basically what they do and it's one of those quality compounders um that I think um was well covered in in the value investing space.

If you look at here the stock price that I have on the chart right now, you would see that it hasn't performed well um in the last one or two years. I think it's down about 40 to 50%. I think at the bottom that you guys see here, it was about 50% from highs. Um there was a sort of recovery now um where I think now it's about 40%.

Um what I always find interesting, we talked about this in our um both biggest winners but also biggest losers episode is the correlation um between the stock price and topline growth. Um which again you hear you see here quite well too. I think when we covered the stock um it was about a month ago. So a lot of this recovery didn't happen yet. So you basically see this spike here but the stock is still significantly lower. And now you sort of see how they closed the gap. Um which I just feel like is is somewhat interesting.

Um when you talk about why the volume is going down um there are many reasons most of them are cyclical as you will see in our episode um the big sort of narrative in the market is that there's a competitor which is called IAA and for the longest time Copart was winning share from IIAa and they had um I think probably about a 7030 market share dynamic um in the last two years that changed um and IA won over more volume from insurance companies and then so sort of the question has been is that a trend and will you know, insurance companies follow and give more of their volume to IAA or is it just um which is how it currently looks, one big insurance company which is progressive. Um that's both winning volume from their competitors and then also shifting that volume to IAA.

An interesting one that I think also helps when you zoom out is if you compare topline growth to EPS growth, you will see that there's a lot of cyclicality in this business and there always has been. So this is not the first time um where Copart is not growing in the top line. You do see that um I would say the decline is quite substantial. So you see that they are actually losing share. Um but through um margin expansion also some very good buybacks as we will see also um they were always able to to grow EPS um to keep margins high even in the times of cyclicality. So generally a company also when you look at the management team um that is just incredibly high um high quality.

One thing that I would assume um will be more important in the future is international growth. Um you already see that it's outpacing the US growth by by quite a margin and that's to some extent because the US is more mature. Um and also because international markets they work differently. Um so the insurance model is not working the same way as in the US. Um where basically again insurance companies give Copa the volume when a car is total. That's not the case internationally. um that usually happens that for example here in Germany um if you total your car you're not giving that to any company like Copart you're just getting money from your insurance and then the car is still with you and you sort of have to figure out what you do with that car um and that is sort of shifting now internationally and Copart is a big um not only beneficiary but they actually are a driver of that shift um in Germany for example they um they have significantly larger operations now than they had a couple of years ago and through that shift um they have not only a lot of growth in the international market, but also significantly higher margins. So, some of that balance between um the struggles in the US, they're outbalanced um by Europe and and some other parts of the world too, but it's primarily Europe.

One chart that I have to show because it's one of the most important things for Copart, the company, the management team is incredibly good at buybacks. So, they actually only buy back stock when it's actually undervalued. Um, and they just bought back $1.6 billion, which is the largest buyback they've ever done in the history. You see some smaller buybacks here. The last time they did a significant buyback is about 15 years ago, compared to the company size. So, it's not even on this chart. Um, which I find very interesting.

And then also, um, what will be a tailwind for them in the future is they will spend less money on buying new yachts. Um, so especially in the last couple of years, there's always been about half a billion dollars. That will be lower now. We don't know what the number will be, but they have a new CEO who's also an old CEO, as as many of you might know, um, who basically said they are not in need anymore to spend half a billion dollars every single year just for yards. So, you know, if they spend 250, that's still 250 million more that they can get into the bank, which is already quite full because they have about $4.2 billion in cash.

One thing that's quite interesting, I don't know if anyone in the in the chat knows, there's a rumor right now about them buying CCC. Um, we sort of looked at it too, there's some, I would say, theories that we have about what they could do with CCC. If any of you guys know, I have your own theories. Um, please put them in in the chat because I think that would be um, very interesting. Um, what you guys think they could do with the um, acquisition if they decide to do so. There are some PE companies, so we don't know if they will actually buy it. Um, but it would be interesting.

I think I got to say to just put out a tier here and then you can say what you think of it. It's still quite cheap. I mean, it's not again anchoring bias. Like we saw it at like 25 bucks um and felt obviously it's a better opportunity there. I think I would put it somewhere here. Um very high quality company. It is still cheap. I do believe that we see the lows right now. I think we we probably are as close to the lows of the cyclical um cyclical part as as you can be. Um so I think it's attractive.

Yeah, I think for me the big question is is obviously AVs and just >> yeah, >> we've talked we talked about it in the pod of uh you know actually um total rates have have increased uh because of the technology incorporated into cars like very minor accidents like you look at a Tesla and and like you know all all the cameras and sensors get thrown off from a minor accident and then the cost to repair that ends up being you know sometimes more than the value the residual value of the are um hence being hence being totaled.

Uh so for me the big question is is just what the world is going to look like with AVs. And it's it's a little abstract and I kind of hate saying it because it's it's like the same argument people make with Uber where they just kind of like oh you know we don't know what's going to happen. AVs are going to ruin everything. Uh the terminal value is too uncertain. Um, I understand Uber well enough where I I can see how uh AVs will actually be um a boon to their business. With Copart, um I think I can see it. Uh I I I you know I I I'm sure like just at a high level as more technology is layered into cars um of course it'll be easier to total. But then the question really is um what is what are the crash rates with with AVs and how good is the technology and like a bet on Copart is almost a bet that um AV technology at scale will still have like flaws like we'll still have um maybe fewer accidents but like I said almost all those accidents will result in the car being totaled. So like kind of a different ratio now than now with the point being um I just I don't know what the unit economics are going to look like for them and and what uh how like you're you're betting on crash rates and and you're kind of betting on um AV technology to still have uh accidents in the future. Obviously we're talking like more than a decade away. So um this is like highly highly speculative. Uh but for me that's like the big terminal value question that comes to mind where it's hard for me to say like hey I want to put Copart away as a coffee can investment and just you know sit on my hands and not touch it for 20 years that you're kind of like well there is um we can see it it's it's like far off on the horizon but we can see a fundamental change to their business model coming.

So it's not necessarily about, you know, if AVs are like 10% of the of the cars on the road, then you still have humans there who will, you know, commit accidents um with with AVs. So I feel like there could be at least, and this is again just a theory, 20 years between where Uber is touched by AVs and where it even becomes a factor for Copart. I think that's significantly further away.

for Copa there's a very good argument to make that it will take 30 or 40 years because you need a significant amount of AVs as percentage of total cars on the road to actually get the crash r lower. Um, so I don't know. I think for me, um, that will still take a lot of time.

That's why you call it terminal whether it happens in 10 20 or 30 years. Well we don't know. Um but it certainly is there. I agree with that. I would probably what do you say it's like B2C then

because I think this company uh and I don't know if this is how I really feel but to be like a de a devil's advocate you could imagine a scenario where uh the AV technology becomes so good that it's considered reckless not to to use it right like like uh you know people are looking at you like you're crazy like you're driving on the roads by yourself a sort of like an iPhone moment for AVs where the technology becomes so good and so cheap that it's just like a no-brainer of how would you not buy an AV? And obviously, you're going to have a percentage of the population that that's resistant to that. But if 10, 20, 30% of the population in the next decade, you know, trade out their current car for an AV, you know, um or or like even if it's a kind of like a hybrid AV, like, you know, maybe there's an option for you to be able to manually drive it, but it also has self-driving capabilities. like uh again I just I I'm really uncertain of of what that means for for Copart's business.

Like they total them at the same rate that they did before. Like that was the case for almost all the stuff that came. So I think to me it it sounds like it would need to almost be a total AV um and then that would need to be the majority on the street to get significant um a significant decrease in the amount of cars that you crash to then see that in cop's value or volume.

Like, uh, maybe the most contentious one is is Copart. Uh, even myself, I go I could go back and forth on I think I could just as easily put Copart in A as I could put it in D. Like I my own thinking on it is very fluid.