White Brook Capital Partners, an investment management firm, released its third quarter 2023 investor letter, a copy of which can be downloaded here. White Brook Capital Partners maintains its outperformance against the S&P Midcap 400 year to date, boasting a 6.49% increase compared to the index’s 4.28% gain. However, it falls short of the S&P 500’s impressive gain of 12.85%. Take a moment to review the fund’s top 5 holdings to gain insights into their primary investment choices for 2023.
In its Q3 2023 investor letter, White Brook Capital mentioned Builders FirstSource, Inc. (NYSE:BLDR) and explained its insights for the company. Builders FirstSource, Inc. (NYSE:BLDR) is an Irving, Texas-based millwork company with a $17.6 billion market capitalization. Builders FirstSource, Inc. (NYSE:BLDR) delivered a 120.81% return since the beginning of the year, while its 12-month returns are up by 130.40%. The stock closed at $143.26 per share on December 08, 2023.
Here is what White Brook Capital has to say about Builders FirstSource, Inc. (NYSE:BLDR) in its Q3 2023 investor letter:
“White Brook continues to invest in Builders FirstSource (BLDR) and believes the stock is materially undervalued. While higher interest rates have substantially slowed the existing housing market, new homes are being built at an above-consensus rate. Fundamentally, the United States continues to be under housed with occupancy of housing at all-time highs, even if particular markets most impacted by the technology sector (SF, Seattle) and a reversal of work from home practices (Miami, Phoenix, exurbs) now see a substantial decline in existing home sale prices.
Tactically, the nation’s largest home builders have adapted to the interest rate environment by adjusting the size of homes built and by subsidizing new customer loans. New housing permits and starts have been far above worst case expectations, and materially better than what would have been expected unless there was a housing shortage, given the current mortgage rate environment. Further supported by solid renovation activity, Builders continues to generate prodigious free cash flow. Over the medium term, the country’s insufficient housing position will have to be rectified, and Builders is well positioned.”
A construction team on site, building a new middle market multi-family asset.
Our calculations show that Builders FirstSource, Inc. (NYSE:BLDR) does not belong on our list of the 30 Most Popular Stocks Among Hedge Funds. We also mentioned Builders FirstSource, Inc. (NYSE:BLDR) in another article. Builders FirstSource, Inc. (NYSE:BLDR) was in 53 hedge fund portfolios at the end of the second quarter of 2023, compared to 57 funds in the previous quarter. Builders FirstSource, Inc. (NYSE:BLDR) delivered a 4.91% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q3 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
