To The Moon

The latest 13F shows that Warren Buffett's position in $TSMC (TSM.US)$ in the third quarter became the focus of the market, and TSMC was the collective leader of the semiconductor rally!

Source: Whalewisdom

In addition to TSMC, Buffett also bought nearly 5.8 million shares of $Louisiana-Pacific(LPX)$, equivalent to a 6.7% stake in the U.S. building materials manufacturer. LPX shares have jumped more than 10% in the past five days, with a recent market cap of about $4.46 billion.

Why $Louisiana-Pacific(LPX)$?

LPX is headquartered in Nashville, Tennessee, not Louisiana, and far from the Pacific. It manufactures building products for use in new home/outdoor structure construction, repair and remodeling. It operates in the US, Canada and South America in the following segments:

Siding: Manufactures wood siding, trim and fascia. 32% of revenue, 16% of EBITDA for the latest quarter.

OSB: Manufactures OSB (oriented strand board - think of it as plywood) panels. 60% of revenue, 82% of EBITDA.

South America: Manufactures OSB panels and siding products in Chile and Brazil for sale in South America. 6% of revenue, 5% of EBITDA.

Other: A framing operation and some timberlands. 2% of revenue, -3% of EBITDA.

As data shows, most of the company's profits come from the OSB segment. The company has benefited from the booming housing market in the last two years. Wood fiber is the company's primary input in its products. The company has faced cost increases for wood fiber and resins. However, the company and others in the industry have successfully raised the prices of their products as well.

The company's 10Q showed total sales of $852 million, down 30.1% YoY, and net income of $226 million, down 38.1% YoY.

Source: https://investor.lpcorp.com/node/18381/html

Demand for LPX products is positively correlated with new home construction, repair and remodeling activity in North America, with a very pronounced cyclical nature.

Where will the housing market go?

The company said there is uncertainty about future economic conditions and housing demand in the U.S. due to the impact of inflation on the economy, including interest rates, employment levels, consumer confidence and financial markets.

The two primary rate-sensitive items are housing and autos, since they are usually bought on credit. So the Fed mainly relies on demand for housing and autos going down, and this is having a spillover effect on other goods and services. However, if inflation is under control and interest rate hikes are put on hold, this will allow housing and autos to breathe a sigh of relief. 

If we can look ahead to next year, the Fed will likely cut rates after inflation is under control and the economy weakens. So the sectors that will benefit are of course housing and autos. If that is the case, it can only mean that Warren Buffett has once again accurately predicted and laid out in advance.

Source: Whalewisdom

Buffett's average paid price is around $51 and only took 0.1% of his portfolio. At today's price, Warren Buffett has made more than $60 million in profits on this stock, a profit of more than 20%. Looking at the 52-week highs and lows, Warren Buffett almost managed to bottom again as well.

Are you bullish on materials/housing stocks? Or any thoughts?

Source: https://www.suno.com.br/noticias/warren-buffett-compras-gasta-us-51-bi-acoes/

Source: https://seekingalpha.com/article/4543451-the-fed-is-set-to-destroy-housing-buy-louisiana-pacific