Builders FirstSource, Inc.
Thesis
Builders FirstSource is a supplier/distributor to the homebuilding industry that has been losing money consistently since 2007. However, the company has the potential to generate significant EBITDA and revenues when homebuilding stabilizes, and it is well-positioned to grow through acquisitions in a fragmented industry.
Did it work?
The thesis was a cyclical recovery and consolidation play: it predicted that Builders FirstSource would generate significant EBITDA once homebuilding stabilized and would grow via acquisitions in a fragmented industry. Both elements subsequently occurred — the housing market recovered in the mid-2010s, BLDR returned to sustained profitability, and it executed large-scale consolidation (most notably the ProBuild acquisition in 2015, making it the industry's largest supplier). However, with no price performance data and unknown timing relative to the pitch, confidence must remain low.