1. Builders FirstSource, Inc. (NYSE:BLDR)
Dendur Capital Stake Value: $132,593,000
Percentage of Dendur Capital’s 13F Portfolio: 19.85%
Number of Hedge Fund Holders: 53
Builders FirstSource, Inc. (NYSE:BLDR) provides professional home builders, subcontractors, remodelers, and consumers with building supplies, manufactured components, and construction services. In November, BTIG analyst Ryan Gilbert raised his price target on Builders FirstSource, Inc. (NYSE:BLDR) to $80 from $60 and kept a “Buy” rating on the shares after the company’s solid third-quarter results.
Builders FirstSource, Inc. (NYSE:BLDR) released its third-quarter results in November. The company’s earnings per share (EPS) came in at $3.39, exceeding expectations by $1.76. In addition, revenue increased by 139.6% year over year to $5.51 billion.
The hedge fund chaired by Malcolm Levine owns more than 2.56 million shares in Builders FirstSource, Inc. (NYSE:BLDR) worth over $132.59 million, representing 19.85% of their investment portfolio.
In its third-quarter 2021 investor letter, Merion Road Capital Management mentioned Builders FirstSource, Inc. (NYSE:BLDR). Here is what the fund said:
“I added to our position in Builder’s FirstSource (“BLDR”) during the quarter. BLDR is the largest national supplier of structural building products and value-added components to the residential construction market. They have been active in consolidating the industry, most notably with the merger of BMC earlier this year. Like other distributors, BLDR benefits from scale advantages that afford them a robust product offering, enhanced purchasing power, and fixed cost leverage. They will continue to acquire smaller competitors and have announced 5 new deals so far this year.
I view the strategic benefit of these acquisitions in three different buckets. There are the core tuck-in acquisitions of facilities and customer lists that increase scale and geographic reach. An example would be the company’s May acquisition of John’s Lumber, a lumber and specialty product distributor serving the Detroit MSA, at 0.5x revenue. There are product acquisitions that leverage their platform to increase distribution and improve the product offering. For instance, last month BLDR announced the acquisition of California TrusFrame, a designer and manufacturer of prefabricated components like trusses and wall panels, at 1.3x revenue. And lastly BLDR has begun investing in software and services. In June they spent $450mm on the purchase of WTS Paradigm, a software company that addresses the complexity around building configuration, estimating, and manufacturing, at 9.0x revenue. By utilizing software to in the planning process, WTS Paradigm cuts down on material and labor waste, ensures an optimal fit of product and design, and eases the contractor’s workload. BLDR has followed this up with a much smaller software acquisition in September…” (Click here to see the full text)
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