JHX - Greenhaven Road Capital -  Louisiana-Pacific Corp.: This Is A Business That Will Get Better Over Time

2024-05-01 09:15:00 ET

Summary

• Louisiana-Pacific Corp’s business has generated prodigious amounts of cash and, instead of empire building or taking excessive bonuses, the management team has purchased roughly half of the outstanding shares in the last five years.
• LPX’s product is differentiated with high barriers to entry, good unit economics, and a long runway for growth as they expand their geographic footprint and product portfolio.
• In my opinion, this is a business that will get better over time.

The following segment was excerpted from this fund letter.

Louisiana-Pacific Corp. ( LPX )

Most people go to Las Vegas for the food, gambling, and entertainment. I went this fall to spend time with LPX’s management team at the International Builders Show. Their behavior in operating the business thus far is not what I would have predicted. Louisiana-Pacific Corp’s business has generated prodigious amounts of cash and, instead of empire building or taking excessive bonuses, the management team has purchased roughly half of the outstanding shares in the last five years. I would expect such an approach from an owner operator, but LPX’s management does not own a ton of stock. I left Las Vegas awestruck at how big the building supply trade show is (all three convention centers) and thinking that we should invest in more CEOs who were forestry majors and fewer CEOs who went to Wharton....

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