Been digging into CPRT and I think the market's overreacting here. Stock's down like 45% over the last year and that sorta reads broken. But when you look under the hood the moat looks totally intact.
Basically Copart runs the salvage/insurance auction network — they've got the land, they've got the digital platform insurers are basically stuck using, and it's a super asset-light setup so the returns on capital are great. Classic "boring business, great economics" situation. And right now you can get it for like 17-21x earnings when it's traded at more like 32x over the last decade. That's a pretty steep discount for a business that hasn't actually changed.
So why's it so cheap? Vehicle volumes and pricing have been soft, which is just a cyclical thing, not structural. And then Jeff Liaw stepped down as CEO and Jay Adair — the guy who actually built Copart into what it is — came back to run it again as of the end of July. Feels like the market's spooked by the CEO change but I'd argue that's actually kind of bullish? Like you're getting the founder back in the seat during a rough patch instead of some outsider trying to figure it out.
So you're basically getting a proven compounder at a price it hasn't seen in ten years, run by the person most responsible for building the moat in the first place. Volumes will normalize eventually, the moat isn't going anywhere.
I'm not going all in given there's still some uncertainty around the leadership transition, but starting a position here feels like the kind of setup that looks obvious in hindsight once it's already re-rated.