Post by Carenaon Jan 31, 2025 9:22am
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Post# 36429828
NVR Inc. - The Difference
NVR Inc. - The DifferenceGood morning,
NVR has been doing the same boring thing since it emerged from bankrupcty in the early 1990's.
They have built and closed homes mainly in the Washington DC area and then over the years have expanded within the eastern United States.
What is their secret sauce:
(i) Like I said, they are very boring....no sexy aquisitions, no fancy investor days and they have never even had a quarterly conference call (lol!). Each quarter out comes a simple press release on earnings and a couple of press releases each year to announce a new share repurchase plan.
(ii) Most of the public builders in the USA have large land banks (hugely capital intensive) which result in long periods of negative free cash and lots of debt. NVR buys all their lots on small option contracts. They quickly turn the lot over by building a quality home and collect the profits.
(iii) Landowners like Lennar or Pulte want NVR in their master plan communities because they have a stellar reputation with homeowners. Instead of "talking up" their operational expertise, they let their financial statements do the talking for them.
(iv) I have come to learn that a good percentage of their management have military or successful athletic backgrounds and this is what drives the extreme operational discipline. Traditionally, most public homebuilders are deemed expensive at 2 times book value.....NVR trades at near 8 times book value!
Enough said!
My next post should be around April 23th ie the Q1 earning release.
Have a great day,
Carena