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Turning Rust into Gold

Junkyard top dog Copart has mastered the online auction--and commands a third of the salvage market

When Barry Rosenstein visited the headquarters of auto-salvage outfit Copart Inc. (CPRT ) in 1993, what greeted him didn't scream: "Great investment!" Recalls Rosenstein: "I drove up there, and there was a junkyard, with a bunch of wrecked cars, a barbed-wire fence, and a metal building." Rosenstein, then a partner with San Francisco investment firm Genesis Merchant Securities LLC, was looking to invest in companies that could lead the consolidation of their industries, and salvage firms were a possibility--no matter how bad they looked.

But after talking with founder and Chief Executive Willis J. Johnson, now 55, Rosenstein knew he'd found a winner. Johnson shared his vision of buying up dozens of auto junkyards and forging them into a nationwide chain. Soon after, Genesis and a group of investors anted up $7 million to get Johnson rolling. Says Rosenstein: "This guy had it."