Episode summary
Drew Cohen on Adobe's AI Threat, Constellation Software, Copart's Moat and Shift4
The Intrinsic Value Podcast
· · 1 hr 29 min · Hosts: Shawn O'Malley, Kyle Grieve, Daniel Mahncke · Guests: Drew Cohen
Summary
Drew Cohen argued that Constellation Software’s AI risk is overstated because its vertical-market products are mission-critical, entrenched in customer workflows, and rarely bought on price alone. He said the real customer priorities are reliability, support, compliance, and not disrupting employees’ habits, so a cheaper AI-built alternative is unlikely to cause broad switching. He also said AI could still help Constellation by speeding feature development and maybe improving organic growth, though his base case is that growth stays modest and customers may simply push back on pricing.
On Copart, Drew described a powerful salvage-vehicle marketplace built on towing networks, salvage-yard land, insurance relationships, and a global buyer base. He said the business is under pressure from fewer accidents, more underinsured drivers, and Progressive’s share gains with Copart’s rival IAA, but he still sees the moat as intact. He emphasized that autonomous vehicles are a long-dated terminal risk rather than an immediate one, and that Copart’s international expansion and potential moves upmarket could offset some of that over time.
He also gave a brief overview of Shift4, saying the payments company embeds itself deeply into merchants’ payment stacks and benefits from sticky integrations, though the market is focused on execution risk from a recent large acquisition. Adobe was mentioned as another topic, but the transcript cuts off before that discussion develops.
Key takeaways
- Drew Cohen said Constellation Software’s AI threat is limited because customers care more about uptime, support, and workflow continuity than lower software prices.
- He expects Constellation’s organic growth to remain mostly modest, though AI could help create more features and support some pricing power.
- Drew said Copart’s moat rests on salvage-yard land, towing logistics, insurer relationships, and a global bidding marketplace that is hard to replicate.
- He views autonomous vehicles as a long-term Copart risk, but not a near-term one, because the US fleet turnover is slow.
- He said Copart’s volume pressure has come partly from underinsured drivers and Progressive shifting business toward IAA.
- Drew described Shift4 as a sticky payments platform that embeds in ERP-connected workflows, but said a big acquisition has made investors question execution.
Notable quotes
“disruption only tends to happen when you have a product that is 10 times better than a previous sort of incumbent product”
“the first thing and the highest preference is that the thing can never break”
“There's over 70,000 different of these very niche software companies and each of them, you know, have their own, you know, handful, maybe dozens, hundreds of customers”
“Copart is the one who will pick up this damaged car after an accident”
“whenever there's a catastrophe event, volumes tend to surge 10 times”
How the episode opens
And Peter Thail likes to talk about how disruption only tends to happen when you have a product that is 10 times better than a previous sort of incumbent product. And that's because of these switching costs. Human habit is very regular.
It's very hard to change the way people do things. And they're not going to change for no reason. You know, 20% 50% cheaper.
In this case, it's probably not going to do it. the least of which uh because they're also going to be skeptical it's actually cheaper because if there is any errors in this AI code they're going to have no idea how to fix it and it could actually end up costing them much more money. All right, we're live.
Thanks everybody for dialing in. Today we have the wonderful Drew Cohen of Speedwell Research hosting a call in our intrinsic value community for the second time. So today I think we're going to start with constellation software maybe move into Copart Shift 4 and if there's some time we might talk about Adobe as well but these should be some pretty interesting case studies and I know most of the folks in our audience will be familiar with uh Drew's really excellent and and thorough work.
So Drew we'll let you take it away.
Awesome. Uh well really happy to be here. Uh for those that don't know Speedball Research is the name of my research company.
We focus on in-depth research for byside investors. Uh just a few words on my background. I worked at Goldman Sachs.
I worked at Capital Group. Really big uh investment buy side firm and so lot of experience in actual Wall Street and finance. Now I'm an investment adviser and then I also run Speedwall Research which is why I'm here today.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai threats
- business moats
- customer acquisition and competitive advantage
- capital allocation
- stock analysis
Companies and tickers mentioned
- ADBE
- META
- CSGP
- CPRT
- FOUR
- ABNB
- FND
- AXON
- CPNG
- DFH
- Adobe
- Meta
- Evolution AB
- CoStar Group
- Constellation Software
- Copart
- Shift4
- Airbnb
- Floor & Decor
- Axon
- Coupang
- Dream Finders Homes
- Davidson Kahn Capital Management
- Speedwell Research
Watch the episode
Watch “Drew Cohen on Adobe's AI Threat, Constellation Software, Copart's Moat and Shift4” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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