No. of Recommendations: 4
'we get a sum of the parts valuation of $5.9-$8.5 billion. The valuation implies a margin of safety of around 30-55% at the current market price (or a 40-100% potential upside).
I think that the market is clearly underestimating the ability of the business to generate cash in the future and also grossly overestimating its cyclicality. The market currently values LPX as a purely cyclical business, although it is relatively clear that this is only the case today to a limited extent. The company is far less susceptible to a bust cycle than in previous periods, while the siding segment in particular offers massive growth potential in the years to come. So you have a very limited downside risk with an attractive upside potential.
In addition, the management makes very good capital allocation decisions (sale of EWP business, very aggressive buyback policy and very good investment and de-investment choices) and acts very strongly in the interests of shareholders, which should further increase shareholder value.
https://seekingalpha.com/article/4593476-louisiana...Will be interesting to see if Buffett or T & T are adding to their LPX position. Wouldn't surprise me if they bought the whole company. The housing and building products segment is something Buffett loves with Clayton, Shaw, Benjamin Moore, Johns Manville, Acme already part of BRK. And Buffett wouldn't mind the cyclicality of earnings one bit.
