Drew Industries is amazing
Yesterday I spent about an hour studying Drew Industries. Looks very impressive. Exellent reports and presentations, whose clarity reminds me of Buffett's letters to shareholders. The management has been around for 35 years or so, consistently owning a big chunk of the business. A steady inexorable growth of revenue, profits, and share price, minumum of sales talk, and maximum efficiency. In short, DW looks very much like a miniature BRKA.
Its success is even more impressive considering that the trailer/manufactured home industry it's operating in can be described by just one word: terrible. While essentially every other company is losing revenues or at best keeps them at the same level, DW manages to grow year after year. And the price is very close to its absolute minimum. It seems to me that DW can't fall much lower, and any improvement in the market, like falling price of steel, will make the shares soar. But even is conditions stay the same, DW somehow seems capable of succeeding where everyone else is failing.
I see only one risk factor, but it's very serious. More than a quarter of sales comes from the doomed manufactured home segment. It is better than in 2001, when this segment accounted for more than half of revenues, but still very significant. To its credit, management has been able to squeeze some modest revenue growth even from this dying segment. However, if manufactured homes go the way of the dodo, not even a company like DW can do much about it. And with continuing growth of house prices, manufactured homes don't really have much of a chance...