Autotrader in the UK (AUTO) is hilarious, they're such a monopoly their customers are trying to revolt but can't.
Been searching for UK monopolies for my substack and find this vehicle selling platform. 63% margin, 51% ROIC and they convert literally 100% of their free cash flow (capex is under 1%?!).
The monopoly got so intense that the relationship with customers is now super toxic. Dealers hate them, but they’re completely trapped because 80% of all traffic goes direct to Autotrader's site. So it basically does whatever it wants.
1900 dealers made a boycott recently, but only 59 of them actually followed through lol.
Dealers might pay Autotrader like £3k a month but clear maybe £25k gross, so they just keep taking more. If a dealer doesn't pay they literally go out of business.
All the backlash has slowed growth and now it’s trading at 14x trailing earnings. Macro environment sucks which is hurting, hard to tell whether it'll turn anytime soon.
But management's taking the opportunity to buyback 25% of the whole company. Controversial one but a good find.
Full, [free write up is here](https://durableinvesting.substack.com/p/stock-pick-the-monster-uk-monopoly) with my valuation if you want the full breakdown.
