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Wedgewood Partners: “We Expect Copart (CPRT) to Grow at Attractive Double-Digit Rates”

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Wedgewood Partners, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. A return of +4.8% was reported by the fund for the Q1 of 2021, outperforming its Russell 1000 Growth benchmark that delivered a 1% return, but below both the S&P 500 and Russell 1000 Value Index that had a 6.2% and 11.3% gains in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Wedgewood Partners, in their Q1 2021 investor letter, mentioned Copart, Inc. (NASDAQ: CPRT) and shared their insights on the company. Copart, Inc. is a Dallas, Texas-based used car dealers company that currently has a $27.7 billion market capitalization. Since the beginning of the year, CPRT delivered a -7.64% return, while its 12-month gains are up by 65.21%. As of April 13, 2021, the stock closed at $117.53 per share.

Here is what Wedgewood Partners has to say about Copart, Inc. in their Q1 2021 investor letter:

"Copart reported +23% growth in quarterly operating income driven by extremely strong average selling prices (+35%) at its online salvage vehicle auctions. The Company maintains an effective duopoly in U.S. salvage vehicle auctions (along with IAA). The outsized increase in ASPs is due to Copart’s unique, two-sided network platform that consists of the largest North American P&C insurance carriers and automobile dealerships, which are getting increasing access to less price-sensitive foreign salvage buyers. As automobiles are becoming more sophisticated with hard-to-repair electronics and computers onboard, Copart is helping insurance partners find a life “after salvage” with consumers, particularly outside the U.S., who place a higher value on these vehicles, often simply due to softer safety regulatory regimes. We expect Copart to grow at attractive double-digit rates as this phenomenon continues for the foreseeable future."

Used cars, used car, selling a used car
Used cars, used car, selling a used car

Copyright: sonyae / 123RF Stock Photo

Our calculations show that Copart, Inc. (NASDAQ: CPRT) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Copart, Inc. was in 46 hedge fund portfolios, compared to 56 funds in the third quarter. CPRT delivered a -3.53% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.