Copart (CPRT, Financial) helped contribute to portfolio performance during the quarter. Gross profit rose +11% and operating income grew +12% as the Company benefitted from a combination of a reversion of automobile total loss frequency to levels closer to pre-pandemic levels, as well as continued share gains at U.S. automobile insurance customers. As vehicles, particularly in the U.S., become ever more sophisticated and complex, they become more difficult and expensive to repair. If a vehicle can’t be repaired, Copart's auctions are the destination of choice for the lion's share of insured vehicles that are declared total losses. Copart should continue to benefit from this long-term trend, especially as insurers struggle with their own labor retention issues, which we think will incentivize them to utilize more of Copart's ancillary salvage processing services. We continue to hold Copart as a core position, as its high returns on capital from its dominant competitive positioning should be sustainable over time.
From David Rolfe (Trades, Portfolio)'s Wedgewood Partners second-quarter 2023 letter.
