In short: His textbook "value trap unchained": bought at the 2009 housing bottom (340→170), added on the way down, took a board seat, drove consolidation (BMC reverse-merger, then the Johnson family's distributor) — half-a-million homes heading back to a million = massive distribution operating leverage. Still owns it; the cash flows manifested and the stock ran.
Builders FirstSource supplies the lumber, trusses and materials that homebuilders use. Robotti bought it at the very bottom of the 2009 housing crash, when far too few homes were being built and the stock was hated. His rule: if a quality name falls 30-40%, the price is usually dropping faster than the business is — so he buys more.
This is his showcase "value trap, unchained." For years the company's real earning power was hidden because almost no homes were being built. He took a board seat and drove a wave of takeovers (buying bankrupt competitors and the industry's biggest distributor) so that when housing recovered, far more sales flowed through the same network — "operating leverage" — and profits exploded. Once those cash flows finally showed up, the market re-rated the stock dramatically. He still owns some.
12:51— Well, so we'll do that just for classroom purposes. There's limited value today. We do own some Builders FirstSource. We do think the company is still well positioned. It has a lot of positive attributes. Of course, we first invested in it in May of '09. So this is pretty much the bottom of the housing cycle. You've gone from building 1.
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