Seth Klarman Portfolio: Top 4 New Stock Picks in 2024

2. Eagle Materials Inc. (NYSE:EXP)

Seth Klarman’s Stake Value: $71,199,000

With a PE ratio of about 18, building materials company Eagle Materials Inc. (NYSE:EXP) is one of the notable stocks Seth Klarman bought this year. Baupost opened a stake worth about $71.2 million in Eagle Materials Inc. (NYSE:EXP).

In February this year, Jefferies published a list of stocks that have seen improvement in their ROE and showed momentum. According to Jefferies these stocks also have strong balance sheets. Eagle Materials Inc. (NYSE:EXP) was one of these stocks.

Horizon Kinetics LLC mentioned Eagle Materials Inc. (NYSE:EXP) in its Q4 2023 investor letter. Here is what the firm said:

“One such example, which might lately be found in some strategies, is Eagle Materials Inc. (NYSE:EXP). It is one of the largest U.S. producers of cement and aggregates, as well as gypsum wallboard. Traditionally, cement makers were highly localized businesses, because cement’s high weight/value ratio makes it uneconomic to truck farther than about a 150-mile radius. A new highway or construction project in the area would be profitable, but when that activity ended, the quarry might have to close until the next time. Over many years, Eagle Materials has taken that cyclicality out of the business by acquiring other such companies, even though any single location remains subject to the historically episodic demand in its immediate environs. It now has dozens of facilities throughout the mid-west and into the sunbelt.

The highly local monopolistic characteristics of each location still remain, though, which lends that character to the entire company. And for obvious reasons, it’s unlikely that many more cement plants will be built in this country. Eagle Materials has 25 to 50 years or more of reserves at every location. This is a kind of business that can benefit from a long-term rising price environment.”