Samir Patel of Askeladden Capital presented his in-depth investment thesis on LGI Homes (US: LGIH) at Wide-Moat Investing Summit 2022.

Thesis summary:

LGI Homes is an owner-operated, process-driven sales and manufacturing organization that happens to be a Top 10 homebuilder in the U.S.

Samir frames it this way because the source of LGI’s “wide moat” is that it approaches homebuilding almost exactly the opposite of how its competitors do. This allows it to earn superior returns regardless of the macro backdrop for housing — the company thrived in the post-GFC period when nobody else did, and it managed to turn a competitor’s worst asset into one of its best.

While earnings will almost certainly fall from an abnormally elevated level in 2021, the market’s pessimism appears overdone, and notwithstanding recent mortgage rates, Samir believes LGI may be worth 3x the recent share price in three years.

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About the instructor:

Samir Patel manages Askeladden Capital, the investment advisor to separately managed accounts, utilizing a concentrated, long-only, value-oriented small-cap strategy.

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