Should You be Confident in Builders FirstSource’s (BLDR) Long-Term Strategy?

Black Bear Value Partners, an investment management firm, published its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -3.0% in June and -10.5% in the quarter, and -11.7% YTD. The S&P 500 returned +5.1% June, +10.9% in the quarter, and +6.2% year-to-date. HFRI Value Index returned +3.1% in June, +7.7% in the quarter, and +7.1% year-to-date. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Black Bear Value Partners highlighted stocks such as Builders FirstSource, Inc. (NYSE:BLDR). Based in Irving, Texas, Builders FirstSource, Inc. (NYSE:BLDR) is a building material, manufactured components, and construction services provider. The one-month return of Builders FirstSource, Inc. (NYSE:BLDR) was 19.31%, and its shares lost 12.99% of their value over the last 52 weeks. On July 2, 2025, Builders FirstSource, Inc. (NYSE:BLDR) stock closed at $133.28 per share, with a market capitalization of $14.729 billion.

Black Bear Value Partners stated the following regarding Builders FirstSource, Inc. (NYSE:BLDR) in its second quarter 2025 investor letter:

“Builders FirstSource, Inc. (NYSE:BLDR): There is a structural shortage of housing in the USA. Higher mortgage rates reduce the supply of existing home supply as homeowners are locked into low-rate mortgages. As we have seen in recent history, the overall pie of housing activity may shrink, with new homebuilders capturing an increasing share of home sales.

Homebuilders can buy-down the mortgage to a lower rate and accept a lower, yet still healthy margin on the home sale. BLDR is a manufacturer and supplier of building materials with a focus on residential construction. Historically this business was cyclical with minimal pricing power as the primary products sold were lumber and other non-value-add housing materials. Since the GFC, BLDR has focused on growing their value-add business that is now 40%+ of the topline. The company has modest leverage and has been using their abundant free-cash-flow to buy over 45% of their stock in the last 33 months…” (Click here to read the full text)

Builders FirstSource (BLDR) Jumps 8.7% as Investors Scoop Up "Undervalued" Stocks

A crane lifting a truss during the construction of a new building.

Builders FirstSource, Inc. (NYSE:BLDR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held Builders FirstSource, Inc. (NYSE:BLDR) at the end of the first quarter, which was 59 in the previous quarter. Builders FirstSource, Inc.’s (NYSE:BLDR) first quarter sales decreased 6% to $3.7 billion. While we acknowledge the risk and potential of BLDR 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 time frame. If you are looking for an AI stock that is more promising than BLDR and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Builders FirstSource, Inc. (NYSE:BLDR) and shared Parnassus Mid Cap Growth Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 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.