Company Overview - Copart, Inc. (NASDAQ:CPRT) operates an online vehicle auction and remarketing platform, primarily serving insurance companies, banks, and rental car companies to process and sell salvaged vehicles through digital auction tools [2]. Market Performance - Copart was highlighted as the fourth worst-performing stock in the Nasdaq-100, experiencing a decline of approximately 32% last year due to losing market share [1]. - The stock is currently trading at over 23 times this year's earnings estimates, indicating it is not considered a bargain at this time [1]. Competitive Landscape - The online auction sector for vehicles is characterized as a duopoly, with Copart being the larger and better-managed player compared to its main competitor, IAA, which has become more aggressive in pricing after being acquired by RB Global [2]. - A national insurance carrier has switched to IAA, further impacting Copart's market share [2]. Financial Performance - Copart's revenue and earnings growth have decelerated to just below 10% in the past 12 months, attributed to a spike in auto insurance leading to an increase in uninsured and under-insured motorists, which has reduced volumes through Copart's insurance vertical that accounts for 80% of its revenues [2]. Investment Decisions - Qualivian Investment Partners sold their position in Copart and initiated a new position in Brookfield Corp, citing the less rational competition and weakening fundamental backdrop as reasons for exiting [2].

Group 1: Fund Performance - Qualivian Investment Partners outperformed the iShares MSCI USA Quality Factor ETF (QUAL) by 69.2% and 61.3% on a gross and net basis since inception through September 30, 2025 [1] - The fund exceeded the S&P 500 by 32.7% and 26.1% respectively, on a gross and net basis [1] Group 2: Copart, Inc. Overview - Copart, Inc. (NASDAQ:CPRT) is an online auction and vehicle remarketing services company with a one-month return of 0.77% and a 52-week loss of 33.41% [2] - As of December 22, 2025, Copart's stock closed at $39.36 per share, with a market capitalization of $38.1 billion [2] Group 3: Investment Strategy - Qualivian Investment Partners sold its position in Copart, Inc. and initiated a new position in Brookfield Corp. [3] - The online auctions sector is characterized as a duopoly, with Copart being the larger and better-managed player compared to IAA, which has become more aggressive in pricing due to its acquisition by RB Global [3] - The increase in uninsured and under-insured motorists has led to a deceleration in Copart's revenue and earnings growth to just below 10% in the past 12 months [3] Group 4: Hedge Fund Interest - Copart, Inc. was held by 59 hedge fund portfolios at the end of the third quarter, a decrease from 61 in the previous quarter [4] - There is a belief that certain AI stocks offer greater upside potential and carry less downside risk compared to Copart, Inc. [4]

Company Performance - Copart, Inc. reported third-quarter fiscal 2025 adjusted earnings per share of 42 cents, in line with the Zacks Consensus Estimate, representing a year-over-year increase of 7.7% [1] - The company generated revenues of $1.21 billion, which fell short of the Zacks Consensus Estimate of $1.24 billion, but still marked a 7.5% increase from the previous year [1] - Service revenues for the quarter were $1.03 billion, up from $946.6 million year-over-year, but below the Zacks Consensus Estimate of $1.06 billion, accounting for 85.4% of total revenues [3] - Vehicle sales totaled $176.8 million, a decline from $180.6 million in the prior-year quarter and below the Zacks Consensus Estimate of $187 million, with U.S. sales increasing by 22% while international revenues dropped by 25% [4] Financial Metrics - Gross profit increased by 5.1% year-over-year to $552 million, while total operating expenses rose by 10.2% to $760 million [5] - Operating income rose to $451.5 million from $437.2 million recorded in the year-ago quarter, and net income grew 6.1% year-over-year to $405.3 million [5] - As of April 30, 2025, the company had cash, cash equivalents, and restricted cash of $2.36 billion, compared to $1.5 billion as of July 31, 2024 [5] Management Insights - Management noted that total loss frequency in the U.S. rose to 22.8% in the first calendar quarter of 2025, up about 100 basis points from the prior year, which is beneficial for Copart's business model as it leads to more salvage vehicles [7] - The company is making ongoing investments in storage capacity, technology, and operations to prepare for both everyday needs and storm-related surges, with expectations that rising total loss frequency will support long-term growth [8]