Builders FirstSource (BLDR) in Black Bear Value Partners Q1 2025

Capitalizing on Housing Shortage with Value-Add Focus

May 09, 2025

Summary

Shift towards value-add products, now over 40% of topline.
Structural housing shortage in the USA supports long-term growth.
Management's strategic share buybacks enhance shareholder value.
Normalized free-cash-flow per share estimated at $10-$15.
Free-cash-flow yield of 8-12% with no growth priced in.

Builders FirstSource (BLDR, Financial) was featured in Black Bear Value Partners' Q1 2025 letter as a key holding, benefiting from a strategic shift towards value-add products, which now constitute over 40% of its topline. The company is well-positioned to capitalize on the structural housing shortage in the USA, with management actively buying back shares to enhance shareholder value. Despite potential short-term volatility, the business is expected to generate normalized free-cash-flow of $10-$15 per share, implying a free-cash-flow yield of 8-12% without factoring in growth.

"Our long-term thesis remains intact as there is a structural shortage of housing in the USA. Higher mortgage rates reduce the supply of existing home supply as homeowners are locked into low-rate mortgages." — Black Bear Value Partners, Q1 2025 Fund Letter

Read full letter at gurufocus Blackbear Partners 2025 Q1 page.

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