Carvana

“And so the stock went from a hundred to 50. We started to buy around then. Of course, you know, we started by all the way down to about five. But my partner Ben, it doesn't feel great when you start to buy at 50 and then at 30 and then at 20 and then the 20 go…”

“He was losing like 3000 dollars a unit on an EBITDA basis. And then he, and you know, if that wasn't enough, he had about 2000 dollars of interest payments per unit. So so he had like 5000 dollars per unit of costs.”

“Someday people will compare Jeff Bezos to Ernie Garcia, not the other way around.”

“By far it's my biggest position, and you know, it didn't help that nothing else seemed to be doing well at the time either.”

“To this day, as far as I'm aware, no one's like replicated this capability. In order to do it, you need to be vertically integrated into prime lending, subprime lending. It just turns out that like no one else is.”

“In the sort of fulfillment sense of it I think, you know, used vehicles are probably the hardest thing to build in but the analogy to Amazon actually, I think is is apt.”

“They put out this poison pill, and the poison pill basically said that anyone who owns over five percent, which was like me and like two other people, can't buy more stock.”

“And we found that 70% of people said that it was either somewhat or very important in their choice to buy from Carvana. Therefore only a third of people were buying from Carvana without the recommendation of a friend or family member.”

“And we track every car that they sell and we compare it to similar cars sold by CarMax. We also compare it to other market indices. And we believe that they sell cars of the order of sort of five, 600 dollars cheaper doing that.”

“Also what I described of Carvana system is a lower cost to operate system than the traditional dealership system.”

“There are more cars available on Carvana's website right now than there are for us right now sitting here in the entire state of Connecticut from all the other dealerships.”

“And they'll probably get to the 13, fourteen-ish percent range based on what they've said, and there's no reason to doubt it.”

“And that whole exchange happened in the summer of 23, and a lot of, sort of, the retelling of the story is, and by virtue of that exchange, they, like, saved the business. By that point, the data I was looking at said that everything was great. That was just k…”

“So I bought the first half and I think instead of in the mid twenties was where I ended up getting kind of most of it. And so I bought some at eighties, some in the mid twenties.”

“Right now, an enormous amount of information is not in the internet, right? So if I were to grill an AI about all things like Medicare, Medicaid, managed care, it knows a lot. If I grilled about Carvana, we pretty quickly run out of stuff. Like this interview …”

“The company's fine. It's right back. It's a little behind where I sort of thought it would be, but it's actually more profitable and it's back on track and the stock's mostly recovered and all the rest.”

“It's been, in retrospect, it's been a huge home run. But, you know, they bought it with all debt. They bought it in February of 22”

“If this business all grown up and super great was a five percent margin business and not a, like a 13 or 14% margin business, I'm not sure they'd have had the wherewithal to make it.”

“Everyone who's tried to build this business besides Carvana has failed, and that's why It's taken Carvana, you know, over 10 years and ten billion dollars to get, you know, where it is.”

“It went from us, you know, being a lead order in a JP Morgan syndicated deal in 22 to all of the bonds a year later trading at 30. Having bought another seven 50 to a billion of bonds on the way down.”

“So we were able to get 90% of the bonds on board. They launch this exchange. The exchange gets blocked.”

“That situation went from, you know, us being down half a billion dollars to up a billion dollars probably in a matter of six months.”

“You can't spin those things up. There, these things that are super messy, right? You got to acquire the land. You got to put it in the right place. You got to build the right network. Then you got to go stand it up with the right capex and the right systems. A…”