No. of Recommendations: 9
Louisiana Pacific, the maker of oriented strand board and engineered wood siding fell over 12% after Q4 earnings. Home Depot shares fell over 7% on disappointing earnings outlook, which probably exacerbated LPX's fall.
BRK owns 10% of LPX, having initiated a position in 22Q3 and added in 22Q4. Current price is lower than what BRK paid in Q4.
LPX is trading at forward PE and PCF of less than 5. It has very high returns on capital. 2023 maybe a tough year, esp if there is a recession. But LPX should survive and thrive in the recovery if home building and repairs.
Management shows discipline in capex and share repurchases (see comments in earnings call). Management was asked about BRK's ownership in the Q@A (see below).
With a market cap of only 4 billion, BRK could acquire it for loose change in Buffet's office couch. It would complement the many building supply companies BRK already owns.
https://seekingalpha.com/news/3938511-louisiana-pa...https://seekingalpha.com/article/4580357-louisiana...Mike Roxland
Got it. And then just one last question before turning it over. Obviously, you have a large shareholder which slightly increased its stake last quarter to slightly under 10%. Obviously, you've been doing a good job in terms of reorienting the portfolio to higher growth, higher value-add products. Do you see more shareholder value being created through the involvement of the shareholder?
Brad Southern
Well, maybe reputationally, it helps a little bit, but I don't think there is any direct and we haven't noticed any direct improve shareholder value as a result of that. But I mean, we're proud to have it. I'll tell you that. But I think any ' so not directly, but I would assume that the credibility that brings to our strategy cannot hurt.
