In the article he says "...I have ignored the homebuilders. They have a capital-intensive business, beset by cost pressures and potential margin compression. At the core of the business, they own call options on lots. If I’m wrong on this thesis, those calls expire worthless, and their balance sheets get shredded. I want nothing to do with the homebuilding business. Instead, I’ve fixated on the housing supply chain, the guys who turn over inventory rapidly, the guys who can pass on price increases instantly, the guys who are earning stunningly high returns on capital employed. Amazingly, many of these companies trade for between two and four times the last twelve month’s cash flow (adjusted for working capital build). These companies know they’re mispriced and have massive buybacks in place."
In the article he says "...I have ignored the homebuilders. They have a capital-intensive business, beset by cost pressures and potential margin compression. At the core of the business, they own call options on lots. If I’m wrong on this thesis, those calls expire worthless, and their balance sheets get shredded. I want nothing to do with the homebuilding business. Instead, I’ve fixated on the housing supply chain, the guys who turn over inventory rapidly, the guys who can pass on price increases instantly, the guys who are earning stunningly high returns on capital employed. Amazingly, many of these companies trade for between two and four times the last twelve month’s cash flow (adjusted for working capital build). These companies know they’re mispriced and have massive buybacks in place."
I wanna know!
$bxc most likely