Smith Douglas Homes IPO
We started the year, with one regular-way IPO in marketing. Smith Douglas Homes $SDHC. We've generally liked new, smaller homebuilders because the US market for new homes is in a chronic deficit. For as long as you can build them, there will be buyers.
The key to making money is limiting risk and controlling all costs to drive repeatable margins and keep inventory turns high.
The king of the category is NVR $NVR which has extremely high returns and very efficient operations. The 10-year chart is not a straight line, but it's good enough to look like a tech stock. There may be better homebuilders but these guys know how to generate high ROIC. Here's a 10-year chart; it's not a straight line, but the chart makes it look like a tech stock., Still, The key to making money, though, is limiting risk and controlling all costs to drive repeatable margins and keep inventory turns high.is the king of operations, returns, and shareholder performance. it trades at 2x EV/R with a 15x P/E.
We have followed and owned some of the smaller newly public builders like Dream Finder Homes $DFH and LandSea Homes $LSEA. Green Brick $GRBK is one that fell through the cracks but it's back on our close watch list.