Conventum - Alluvium Global Fund on Copart, Inc.
Thesis
Alluvium initiated a position in Copart after a decline of more than 50% from its May 2025 peak created what it viewed as an unusual entry point into a high-quality business. Copart operates a vehicle-auction platform in a duopoly, with strong long-term sales and profit growth, negligible debt and high returns on invested capital. The fund expects autonomous driving to reduce accident frequency over time, but believes the proportion of accidents resulting in total losses should keep rising because vehicles are more complex and costly to repair. It sees current insurance downgrading and opt-out behavior as more cyclical than structural, making the share-price weakness a discount to its valuation.
“the falling share price has provided us with a rare opportunity to invest in the type of high quality business that we look for at a discount to our valuation.”
Key risks
- Autonomous driving could reduce accident frequency
- Consumers may continue to downgrade or opt out of insurance
- Limited scope for domestic growth large enough to materially move the business