Another day, and another 12 month share price low. Depressing. Perhaps I should sell. Nah
Sellers outnumber buyers by 3, often 4 to 1, most days.
In the past 12 months or so we've seen takeover bids for Adelaide Brighton cement, Boral, and CSR. Today I'm reading about Fletcher Building Supplies.
The one thing in common amongst the takeover offers in this beaten-up sector is exposure to Australian residential construction. I don't include James Hardie as its revenue is primarily from the US. I also exclude Brickworks, as its ownership structure makes a takeover very difficult. Also, its revenue also comes from arrangements with Goodman for property development, and various other investments, so it probably deserves a higher price multiple.
I asked ChatGPT to tell me the ASX listed companies in this sector. It listed Big River along with those I've mentioned, along with another (Wagner's -- WGN) which I've never heard of. That's pretty much it.
Our share price has essentially halved, from a high of $2.80 to our current ~$1.40. With Fletchers also now a potential target, anyone would think there's expectations of future growth ahead in the near future for this sector. And that the problems we're currently facing are temporary. Pretty much every company except for Big River has either been taken over, or there's suitors hovering.
This is kind of ridiculous, and not going to happen, but given our national network, trade customers, and new build/renovation focus, if I were running Beacon Lighting (BLX) with a $500m market cap, I'd be interested in Big River which punches above its weight in having a national distribution network. Ridiculous, I know. BLX is consciously growing its trade division. Imagine "Beacon Trade" with lighting and timber focused on the builder/tradesman rather than retail customers. I'm only half serious.
The question I keep asking myself is whether I'm totally wrong about BRI and getting myself deeper and deeper into trouble here (it's only 1.5% of my portfolio, but being 25% odd down still sucks). Maybe it's just ego, and I want to be right. I don't think it's that though... I think it's general, sector specific malaise.
A look at our all-time share graph shows that when BRI shares turnaround, the move upwards happens quite quickly. How much damage is done before the turnaround is another matter entirely! That all-time graph shows just how cyclical this industry is. It's disturbing, but comforting in a way. Kind of as inevitable as the tides or gravity.
One of my favourite all time investors is late 1800s/early 1900s Hetty Green. The current BRI share price reminds me of the investment philosophy she employed:
The lower BRI gets, the more value I'm seeing. If we reach $1.25 I'll likely double my holding size, intestinal fortitude not withstanding!
Good luck to all of us holders.
