We initiated a new position during the second quarter in Masonite International Corp (DOOR). Masonite is a leading, vertically-integrated manufacturer of interior and exterior doors. In 2013, Masonite sold 32 million doors to over 7,000 customers in 80 countries. Sales are split 58% U.S., 16% Canada, and 26% rest of world. Masonite has dominant market positions in its product categories, particularly in North America, and is poised to benefit from an improvement in residential and non-residential construction activity off of depressed levels. Additionally, the doors industry has consolidated recently for certain product categories, improving Masonite’s ability to raise prices, even though capacity is underutilized. The management team is impressive and has inculcated a culture of operational discipline and innovation. We believe that EBITDA can triple as construction levels normalize and pricing firms. Accretive automation investments and acquisitions should be additive to growth. (David Kirshenbaum)
From Ron Baron (Trades, Portfolio)’s Baron Funds Second Quarter 2014 Report.
