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A number of classes from the founding father of Copart

Copart (CPRT, $65.21) is the world’s largest salvage auctioneer. (Photo: Getty Images)

GUEST EXPERT. In March 2019 I wrote a blog titled “What is meant by “quality company”?»

In this blog I have used the Copart company as an example precisely because I believe that it contains the elements that make up a high quality company. Copart (CPRT, $65.21) is the world’s largest salvage auctioneer.

The company went public in March 1994 at a price of $12. If we take into account the splits that have taken place since that date, the initial price of the security is $0.25 per share. The average annual return on the share since March 1994 has therefore been 21.2%. An initial investment of $10,000 would be worth almost $2.5 million today!

Well I just finished the book.scrap to goldwrote Willis Johnson, the founder of Copart. Since COTE has 100 shares of Copart in its managed portfolios, I may be biased. However, it seems to me that Willis Johnson’s book should be read by any investor who wants to learn more about the best entrepreneurs and the companies that have had great market success over a long period of time. In my ranking system of the books I’ve read, I gave this book five stars (out of five).

Here are just a few of the many lessons Mr. Johnson shares with us:

Mind the cents and your dollars will take care of themselves“. This quote comes from the father of the Copart founder, who is himself an entrepreneur and has always been careful about unnecessary expenses.

“If you take care of your business, it will take care of you.” This quote is also from Willis Johnson’s father, Mr. Willis Johnson senior. I understand that an entrepreneur must be passionate about his business. In return, the latter will have a sense of achievement.

Only hard work leads to long-term success. The success story of the entrepreneur is years of hard work.

You don’t need a college education to be successful in business. Neither Willis Johnson nor his successor and son-in-law Jay Adair went to college.

You have to know how to use the opportunities. Willis Johnson has repeatedly demonstrated his ability to make quick decisions when opportunities arise. On the other hand, he had been well prepared and informed beforehand. For example, when buying a damaged parking space, he could make a higher offer than other buyers, but after taking stock of all the vehicles in the yard.

Don’t be afraid to get your hands dirty. A true entrepreneur like Willis Johnson is willing to do anything for the good of his business or to serve a customer well.

Be ready to innovate and go against the current. Copart was the first company in its industry to only offer online auctions and no physical auctions. Copart’s online auctions began in 1998, at the start of the company’s move to the Internet.

Invest for the long term. Between 1995 and 1998, Copart invested $3 million, a substantial sum at the time and certainly a drag on the growth of its profits, in a computer system to manage its inventory and all of its activities. This system allowed him to continue to grow in the many years that followed.

Admit mistakes and learn. In 1995, the company began buying and selling the damaged vehicles of its customers, the insurers, on its own account. Executives soon realized that this was a mistake and reverted to the method of Copart acting as an agent for insurers without taking ownership of the vehicles.

Know when to give up. After building a strong management team, Willis Johnson was humble enough to retire from running the company. He fully retired in 2009, which hasn’t stopped Copart from continuing to grow over the past 13 years.

In my opinion, there are important commonalities between entrepreneurs who are very successful in business. Willis Johnson’s book exhibits many of these qualities.

Philippe LeBlanc, CFA, MBA

Chief Investment Officer at COTE 100

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