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on My Watchlist
This is the latest in a number of home builders I picked up, mostly during the great recession. Even though home building has come back strong lately at ~900K units per year pace in the U.S. right now, we are still at historically low levels unseen prior to the great recession and over 50% off of the long term 50+++ year U.S. historical average of ~1.5m units per year. Land is also an issue for builders these days and BRP has a large supply and sells land in addition to home building. When I made this pick BRP was trading for something like 20X earnings which seems cheap to me given the upside for the industry as a whole getting back to normal. IMO given the large public builders access to capital and some economies of scale they will outpace the industry in general going forward as they did in the last cycle. I've only had a cursory look at this one from a recent article somewhere, so I don't pretend to understand the specifics to this company well. One issue I have is that I understand they have a lot of land in Canada. Canada didn't get hit as hard as the U.S. in the great recession and my understanding is that land may be expensive there. I'm also in the Chanos camp on China and the commodity bubble and given Canada's resource heavy economy I worry about "their turn coming".
Brookfield RP is a land/location bank:"primarily acquires and develops landfor residential use"That means it is almost a pure monopoly play."BRP’s Canadian land investments are >80% concentrated in oil sands-rich Alberta"
I'm a big fan of Mick McGuire and he believes that BRP's assets are worth three times the company's current market value. It may take time for the market to realize that, but I can wait. A continued recovery in home prices and land values will help as well. Deej
Trades at book value, currently 8x earnings. Awesome buy
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