Black Bear Value Partners, an investment management firm, published its second quarter 2023 investor letter, a copy of which can be downloaded here. Black Bear Value Fund returned +4.4%, net, in June and +14.0%, net, YTD, compared to the HFRI Value Index, which returned +3.3% in June and is +5.9% YTD. During the same period, the S&P 500 returned +6.6% and +16.9%, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Black Bear Value Partners highlighted stocks like Builders FirstSource, Inc. (NYSE:BLDR) in the Q2 2023 investor letter. Based in Irving, Texas, Builders FirstSource, Inc. (NYSE:BLDR) is a building material, manufactured components, and construction services provider. On September 1, 2023, Builders FirstSource, Inc. (NYSE:BLDR) stock closed at $148.74 per share. One-month return of Builders FirstSource, Inc. (NYSE:BLDR) was -2.29%, and its shares gained 153.95% of their value over the last 52 weeks. Builders FirstSource, Inc. (NYSE:BLDR) has a market capitalization of $18.598 billion.
Black Bear Value Partners made the following comment about Builders FirstSource, Inc. (NYSE:BLDR) in its Q2 2023 investor letter:
“Builders FirstSource, Inc. (NYSE:BLDR) is a manufacturer and supplier of building materials with a focus on residential construction. Historically this business was cyclical with minimal pricing power as the primary products sold were lumber and other non-value-add housing materials. Since the GFC, BLDR has focused on growing their value-add business that is now 40%+ of the topline. The company has modest leverage and has been using their abundant free-cash-flow to buy in over 30% of the stock in the last 18 months.
While mortgage rates are higher, they are not unusual versus history. The low rates of the last 5-10 years are the outlier. We have a structural shortage of housing in the USA. With existing homeowners locked into lowrate mortgages, the aspiring homeowner may increasingly need to find a home from a homebuilder. The next 6-12 months could be rocky as people adjust to the increase in pricing and rates. Eventually the housing market should adjust to the new normal (or rates could go down).
Normalized free-cash-flow per share looks to be in the range of $10-$14 per year. At quarter end pricing of ~$136 that implies a free-cash-flow yield of 7-10%.”
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Builders FirstSource, Inc. (NYSE:BLDR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held Builders FirstSource, Inc. (NYSE:BLDR) at the end of second quarter which was 51 in the previous quarter.
We discussed Builders FirstSource, Inc. (NYSE:BLDR) in another article and shared Stanley Druckenmiller’s 13F portfolio and its top 15 stock picks. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
