We came across a bullish thesis on Landsea Homes Corporation (LSEA) on Twitter by InvestSpecial. In this article, we will summarize the bulls’ thesis on LSEA. Landsea Homes Corporation (LSEA)’s share was trading at $5.93 as of April 21st. LSEA’s trailing and forward P/E were 12.62 and 8.12 respectively according to Yahoo Finance.
A bird’s eye view of modern single-family rental homes in a suburban neighbourhood.
LSEA, a Dallas-based regional homebuilder, specializes in developing high-quality homes and master-planned communities across major U.S. markets, including Arizona, California, Texas, and recently Boston. The company offers a diverse portfolio ranging from suburban single-family homes to mid- and high-rise residences in high-demand areas like Silicon Valley and Florida. Despite being the highest-growth builder among its peers—home deliveries surged 60% year-over-year in Q4 2023 and are expected to climb another 15% in 2025—LSEA trades at a steep 50% discount to its tangible book value (TBV), driven largely by its high leverage and small market cap of $260 million.
This undervaluation has attracted activist interest from Mill Road Capital, which owns 6.5% of the company and has launched a campaign to unlock value. Believing the company should be sold, the activist argues that LSEA lacks strategic flexibility in its current form due to its balance sheet constraints. Mill Road has nominated three directors to the board ahead of the upcoming annual meeting, signaling it is serious about pushing for change. It sees potential for up to 100% upside in a sale scenario, targeting a valuation of 1x TBV, in line with industry averages.
However, that expectation may be aggressive. While LSEA’s growth trajectory is compelling, especially given its superior delivery pace and monthly home sales performance, its leverage remains a concern. A more realistic rerating based on growth and peer comparisons could justify a 30–40% premium to current prices, implying a valuation closer to 0.7x TBV. Still, this represents a significant upside from current levels. With activists actively engaging, board changes under consideration, and growth momentum continuing, LSEA presents a high-risk, high-reward setup, where strategic actions like a sale could serve as a powerful catalyst for revaluation.
Landsea Homes Corporation (LSEA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held LSEA at the end of the fourth quarter which was 18 in the previous quarter. While we acknowledge the risk and potential of LSEA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LSEA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.