Really liked this Omar but just thought i'd challenge you on a couple points to see what you think. Unit volumes at IAA grew 4.7% YoY in the most recent period while Copart's declined 2.8%, meaning all industry unit growth is currently coming at Copart's expense... + Progressive, the fastest growing major US insurer, is actively redirecting volume. You said the moat is actively strengthening, but does IAA growth not suggest the opposite? Also you don't mention the active DOJ money laundering investigation, wondering what you think on that? And finally I feel that the capital allocation criticism is buried in one sentence when it reallly deserves more: a management team that claims 28% ROIC sitting on $4.79bn in cash earning treasury rates for years, only deploying buybacks after a 47% price decline, I find is reactive rather than proactive. None of this overrides the thesis, and I personally think I will be buying more because I still find the price very attractive and thesis is intact, but clearly you're knowledgable about the topic so wanted to hear your thoughts. Thanks again.
Thanks so much for your thoughtful reply, and you're right to push on all three points. Let me work through each one honestly.
On the IAA volume data
You're correct that the headline numbers show IAA growing 4.7% while Copart was down 2.8%. But there's an important piece of context that management flagged on the Q2 FY2026 call: the year-over-year comparison was materially distorted by the hurricane activity in fiscal 2025, Helene and Milton generated significant one-time volume for Copart that inflated the prior year base. Strip that out and the underlying volume picture is considerably less alarming than the headline number suggests.
There does appear to be a genuine Progressive volume shift toward IAA. My understanding is that Progressive has historically been an IAA loyalist, RB Global reportedly held around 75% of Progressive's salvage volume already, which means Copart's direct exposure to a further Progressive shift is more limited than it might appear. If this becomes a multi-year pattern rather than a single-period data point, that would start to meet the "sustained volume loss" threshold I set as a thesis-changing signal.
On the DOJ investigation
The nature of it matters though: this isn't an allegation that Copart itself laundered money. The investigation is into whether Copart's platform practices were adequate to prevent illicit financial activity by its members, primarily international buyers. It's worth noting that this type of investigation isn't unique to Copart, large marketplace platforms with international buyer bases, including Amazon, have faced similar scrutiny around anti-money laundering compliance at various points. Copart updated its anti-money laundering policy as recently as December 2025, which suggests active remediation rather than indifference. My expectation is that this will create some near-term noise around the stock but is unlikely to affect the long-term trajectory of the business.
On capital allocation
I do have a genuine objection to leaving capital idle when the underlying business earns 29% ROIC, the opportunity cost is real. That said, I think the management's philosophy here is actually coherent when you understand the context. The cash cushion isn't laziness, it's there to fund opportunistic land acquisition, which is the single most important competitive investment this business makes. History has validated that approach repeatedly: owning land in dense urban markets near population centres is the moat, and having the balance sheet to act quickly when the right parcel becomes available has compounded that moat over four decades.
The buyback preference also reflects a clear and consistent view: return capital when the price is genuinely attractive, not as a routine programme. I don't see anything wrong with that approach, in fact it's exactly the kind of capital discipline I'd want to see from a management team running a high-ROIC business.
One more thing worth mentioning on the competitive moat: the majority of IAA's yard network is leased rather than owned, while Copart owns the vast majority of its operational land outright. That distinction matters more than it might seem at first glance. In an inflationary environment, owned land means cost stability and long-term control. For insurance companies evaluating their salvage partners, Copart's infrastructure permanence is itself a form of reliability that leased networks simply can't guarantee in the same way. That structural advantage compounds quietly in the background.
If you enjoy businesses with straightforward competitive logic that compounds over time, you might want to have a look at the Pool Corporation report. Very different industry, but the same underlying idea: dominant infrastructure position in a non-discretionary market, scale advantages that widen year after year, and currently priced at what I think is a genuinely interesting entry point. Worth a read if you haven't already.
Growth has moderated from the peak years but the runway is very much intact.
International expansion is still early innings, total loss frequency is at all time highs, and the capex cycle in the US is maturing which means more free cash flow conversion going forward.
I expect double digit FCF per share growth to continue in the near term.
The best years for this business may still be ahead.
Looking at recent filings, most of what appears as insider selling at Copart is programmatic, sales executed under pre-scheduled 10b5-1 plans, often coinciding with option exercises. That is directors and executives diversifying personal wealth in an orderly way, I don’t see it as
a signal of lost conviction in the business.
The more meaningful insider signal, in my view, is what the company itself is doing. Copart has been deploying its cash pile to buy back its own shares, which tells something important, management believes the current share price understates the replacement value of the global yard network they have spent forty years building. You cannot buy 21,000 acres near major population centres at today’s prices. The stock, at current levels, may be offering exactly that.
I would be more concerned if they were selling shares and pulling back on land acquisition. That combination would tell a different story. For now, the company remains the most bullish insider in the room.
Really liked this Omar but just thought i'd challenge you on a couple points to see what you think. Unit volumes at IAA grew 4.7% YoY in the most recent period while Copart's declined 2.8%, meaning all industry unit growth is currently coming at Copart's expense... + Progressive, the fastest growing major US insurer, is actively redirecting volume. You said the moat is actively strengthening, but does IAA growth not suggest the opposite? Also you don't mention the active DOJ money laundering investigation, wondering what you think on that? And finally I feel that the capital allocation criticism is buried in one sentence when it reallly deserves more: a management team that claims 28% ROIC sitting on $4.79bn in cash earning treasury rates for years, only deploying buybacks after a 47% price decline, I find is reactive rather than proactive. None of this overrides the thesis, and I personally think I will be buying more because I still find the price very attractive and thesis is intact, but clearly you're knowledgable about the topic so wanted to hear your thoughts. Thanks again.
Thanks so much for your thoughtful reply, and you're right to push on all three points. Let me work through each one honestly.
On the IAA volume data
You're correct that the headline numbers show IAA growing 4.7% while Copart was down 2.8%. But there's an important piece of context that management flagged on the Q2 FY2026 call: the year-over-year comparison was materially distorted by the hurricane activity in fiscal 2025, Helene and Milton generated significant one-time volume for Copart that inflated the prior year base. Strip that out and the underlying volume picture is considerably less alarming than the headline number suggests.
There does appear to be a genuine Progressive volume shift toward IAA. My understanding is that Progressive has historically been an IAA loyalist, RB Global reportedly held around 75% of Progressive's salvage volume already, which means Copart's direct exposure to a further Progressive shift is more limited than it might appear. If this becomes a multi-year pattern rather than a single-period data point, that would start to meet the "sustained volume loss" threshold I set as a thesis-changing signal.
On the DOJ investigation
The nature of it matters though: this isn't an allegation that Copart itself laundered money. The investigation is into whether Copart's platform practices were adequate to prevent illicit financial activity by its members, primarily international buyers. It's worth noting that this type of investigation isn't unique to Copart, large marketplace platforms with international buyer bases, including Amazon, have faced similar scrutiny around anti-money laundering compliance at various points. Copart updated its anti-money laundering policy as recently as December 2025, which suggests active remediation rather than indifference. My expectation is that this will create some near-term noise around the stock but is unlikely to affect the long-term trajectory of the business.
On capital allocation
I do have a genuine objection to leaving capital idle when the underlying business earns 29% ROIC, the opportunity cost is real. That said, I think the management's philosophy here is actually coherent when you understand the context. The cash cushion isn't laziness, it's there to fund opportunistic land acquisition, which is the single most important competitive investment this business makes. History has validated that approach repeatedly: owning land in dense urban markets near population centres is the moat, and having the balance sheet to act quickly when the right parcel becomes available has compounded that moat over four decades.
The buyback preference also reflects a clear and consistent view: return capital when the price is genuinely attractive, not as a routine programme. I don't see anything wrong with that approach, in fact it's exactly the kind of capital discipline I'd want to see from a management team running a high-ROIC business.
One more thing worth mentioning on the competitive moat: the majority of IAA's yard network is leased rather than owned, while Copart owns the vast majority of its operational land outright. That distinction matters more than it might seem at first glance. In an inflationary environment, owned land means cost stability and long-term control. For insurance companies evaluating their salvage partners, Copart's infrastructure permanence is itself a form of reliability that leased networks simply can't guarantee in the same way. That structural advantage compounds quietly in the background.
If you enjoy businesses with straightforward competitive logic that compounds over time, you might want to have a look at the Pool Corporation report. Very different industry, but the same underlying idea: dominant infrastructure position in a non-discretionary market, scale advantages that widen year after year, and currently priced at what I think is a genuinely interesting entry point. Worth a read if you haven't already.
Are they still growing? From memory, forward growth is much lower than historical.
Thanks for reading and for the question.
Growth has moderated from the peak years but the runway is very much intact.
International expansion is still early innings, total loss frequency is at all time highs, and the capex cycle in the US is maturing which means more free cash flow conversion going forward.
I expect double digit FCF per share growth to continue in the near term.
The best years for this business may still be ahead.
Looking at recent filings, most of what appears as insider selling at Copart is programmatic, sales executed under pre-scheduled 10b5-1 plans, often coinciding with option exercises. That is directors and executives diversifying personal wealth in an orderly way, I don’t see it as
a signal of lost conviction in the business.
The more meaningful insider signal, in my view, is what the company itself is doing. Copart has been deploying its cash pile to buy back its own shares, which tells something important, management believes the current share price understates the replacement value of the global yard network they have spent forty years building. You cannot buy 21,000 acres near major population centres at today’s prices. The stock, at current levels, may be offering exactly that.
I would be more concerned if they were selling shares and pulling back on land acquisition. That combination would tell a different story. For now, the company remains the most bullish insider in the room.
Cheers