In short: Hotchkis & Wiley (Focused Global Value Strategy): "the dominant DIY moving and self-storage company in North America, operating nearly 22,000 rental locations and a large independent dealer network." The profit pool is the hard part of the business: "the majority of its profits from complex, hard-to-replicate one-way truck rentals," where "its extensive network and sophisticated pricing model provide a durable competitive differentiator… allowing it to historically earn sustainably higher returns than competitors." Two more legs: self-storage "offers long-term growth potential with improving occupancy and below-market rates," and "its real estate assets add optionality at a low valuation multiple." The re-rating driver named: "the market began to look through elevated COVID-era fleet depreciation to normalizing earnings, declining capex, and a pivot toward shareholder returns." Note the non-voting UHAL/B share class.
U-Haul is the do-it-yourself moving business — the orange trucks — plus a large and growing self-storage operation, across nearly 22,000 locations. Note that this pitch is for the non-voting share class.
Most of the profit comes from one-way rentals, where you pick a truck up in one city and drop it off in another. That is much harder to run than it looks, because trucks accumulate in the wrong places, and solving it requires both a dense network and sophisticated pricing to nudge demand back the other way. Hotchkis argue this is what has let U-Haul earn better returns than competitors for decades.
Two other sources of value: the self-storage business, where occupancy is rising and existing customers are paying below market rates, and the property itself, which is carried cheaply. The reason the shares moved is that investors are finally looking past the heavy depreciation charges from vehicles bought during the pandemic to normalised earnings, lower spending and cash returned to shareholders.
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