BlueLinx Holdings’ (BXC) Growth Initiatives May Attract Industry Consolidators

Third Avenue Management, an investment management company based in New York City, released its “Third Avenue Small-Cap Value Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the fund returned -4.54% compared to -5.87% % for the MSCI USA Small-Cap Value Index (the “Index”) and -7.74% return for the Russell 2000 Value Index. The Fund has returned +15.46%, annualized, for the trailing five-year period. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its first-quarter 2025 investor letter, Third Avenue Small-Cap Value Fund highlighted stocks such as BlueLinx Holdings Inc. (NYSE:BXC). BlueLinx Holdings Inc. (NYSE:BXC) is a building products distributor, headquartered in Marietta, Georgia. The one-month return of BlueLinx Holdings Inc. (NYSE:BXC) was -4.59%, and its shares lost 34.06% of their value over the last 52 weeks. On May 8, 2025, BlueLinx Holdings Inc. (NYSE:BXC) stock closed at $67.75 per share with a market capitalization of $543.505 million.

Third Avenue Small-Cap Value Fund stated the following regarding BlueLinx Holdings Inc. (NYSE:BXC) in its Q1 2025 investor letter:

“During the quarter, the Fund initiated a position in BlueLinx Holdings Inc. (NYSE:BXC). BlueLinx Holdings Inc. (“BlueLinx”), is a distribution business, acting as an intermediary between the manufacturers of finished residential and commercial building products – such as siding, millwork, and specialty lumber panels – and product retailers and professional contractors in local markets. The company’s key assets enabling its distribution capabilities are a nationwide footprint of 65 warehouses, storage facilities, and logistics assets. The company has seen its stock decline meaningfully in recent quarters in anticipation of a perceived slowdown in U.S. housing and potential disruptions to the supply of imported building products.

Although the company has narrow operating margins typical of many distribution businesses, BlueLinx has a strong track record of generating attractive free cash flow as a public company. Further, the company maintains a net cash balance sheet that puts it in the enviable position of having substantial financial wherewithal and flexibility, potentially enabling the company to identify value enhancing opportunities in a tumultuous environment. Fund management was able to build a position in BlueLinx at prices near tangible book value as housing sentiment continues to be depressed…” (Click here to read the full text)

BlueLinx Holdings Inc. (NYSE:BXC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held BlueLinx Holdings Inc. (NYSE:BXC) at the end of the fourth quarter which was 16 in the previous quarter. BlueLinx Holdings Inc.’s (NYSE:BXC) first quarter net sales declined 2% to $709 million. While we acknowledge the potential of BlueLinx Holdings Inc. (NYSE:BXC) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In addition, please check out our hedge fund investor letters Q1 2025 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.