GoodHaven Capital Management, a concentrated portfolio investment management firm, published its fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 7.93% was recorded by the fund at year end of 2020, below its S&P 500 benchmark that delivered a 17.46% return in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
GoodHaven Capital Management, in their Q4 2020 investor letter, mentioned Builders FirstSource, Inc. (NASDAQ: BLDR) and emphasized their views on the company. Builders FirstSource, Inc. is a Dallas, Texas-based millwork company that currently has a $9.4 billion market capitalization. Since the beginning of the year, BLDR delivered an 11.66% return, impressively extending its 12-month gains to 241.86%. As of March 25, 2021, the stock closed at $44.05 per share.
Here is what GoodHaven Capital Management has to say about Builders FirstSource, Inc. in their Q4 2020 investor letter:
“Builders FirstSource climbed into the top five the old-fashioned way – good results, an attractive merger announcement, and a higher stock price. To paraphrase my January 2020 letter when explaining our thesis; “Builders is the nation’s largest supplier of structural building products and services to the professional market for new residential construction and repair and remodeling. This is a consolidating, cash generative industry starting to favor the biggest players, and with minimal real disintermediation risks. However, they do operate in a cyclical industry.” In August, Builders announced a merger with its main public competitor BMC Stock Holdings which will further consolidate the industry, solve a succession issue at Builders and lower its leverage – at a fair price. The combined company has near-term potential free cash flow of over $3/share – though volatile lumber prices will always cause some noise – and much higher long-term free cash flow potential. Chairman of the Board Paul Levy has been working on this deal for a while – we send him our regards and thanks.”
Our calculations show that Builders FirstSource, Inc. (NASDAQ: BLDR) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Builders FirstSource, Inc. was in 37 hedge fund portfolios, compared to 38 funds in the third quarter. BLDR delivered an 8.40% return in the past 3 months.