This disparity is quite puzzling considering the businesses have very similar models with comparable operating tailwinds. In contrast, IAA trades at 11.2x forward EBITDA and has a $4.9 billion market capitalization. These businesses are very desirable assets given the high barriers to entry, counter cyclical and recession resistant characteristics, strong market share, secular growth and high cash flow generation.Ĭopart currently trades at roughly 17.5x forward EBITDA and has an approximately $27.5 billion market capitalization. We suspect, based on estimates and our own analysis, that IAA could have roughly 40% of the market. Collectively, these two companies hold an estimated 80% of the North American market share.
Kett with a new CEO who is more dynamic and equipped to reinvigorate the organization. We believe there are two strategic actions for the Board of Directors (the “Board”) to consider at this point:
Given IAA’s underperformance and the fact that the Company’s market capitalization has plummeted by roughly 40% since reporting third-quarter earnings in November 2021, the status quo cannot persist. In our view, Chief Executive Officer John Kett bears significant responsibility for these unacceptable missteps and results. In our view, this underperformance can be attributed to a multi-year period of market share loss, poor capital allocation decisions related to acquisitions and issues pertaining to guidance and investor expectations. (“KAR”) in 2019, IAA has dramatically underperformed the broader market, relevant peers and Copart. Since being spun off from KAR Auction Services, Inc. IAA’s share price performance is even more disappointing on a relative basis. Unfortunately, despite strong industry tailwinds, IAA’s share price is -38.3% over the past year and -0.7% since going public in June 2019. (“Copart”), which is the Company’s closest competitor, control the vast majority of the market for lightly damaged, salvaged and clear-title automobiles, parts and heavy equipment. We invested in IAA because it appears to be a fundamentally sound business that operates in an attractive and growing market with duopolistic characteristics. (NYSE: IAA) (“IAA” or the “Company”), beneficially owning approximately 2% of the Company’s outstanding common stock. Ancora Holdings Group, LLC today released the below letter that has been sent to IAA Inc.’s Board of Directors:Īncora Holdings Group, LLC (together with its affiliates, “Ancora” or “we”) is a meaningful stockholder of IAA, Inc.
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