The Insider: Meet the Fund Manager sessions are a great way to hear directly from leading funds managers. They share their approach to investing, favourite companies and their market view for the year ahead.
The construction industry is experiencing an upswing spurred on by the Federal Government’s HomeBuilder scheme. Robert Miller, Portfolio Manager from NAOS Asset Management, has tipped building materials companies to benefit from the current conditions. He highlighted building material wholesaler Big River Industries (ASX: BRI) as one company to watch in this space.
Big RIver is like a trade-only Bunnings with a 100 year old history as a successful business. The company is also Australia’s biggest manufacturer and supplier of timber formply, an important material used in concrete pouring.
Big River is a multi-focused business that provides a myriad of specialist products and services to an array of different sectors. According to Mr Miller, this creates a “natural hedge” for the company, making it resilient through market shifts.
Following what Big River’s CEO Jim Bindon terms a “pretty typical” three-year downturn, the switch flicked earlier this year and growth returned to the company’s addressable market.
“The whole sector went through a pretty tough period pre-COVID for a few years, and we think they’re certainly coming out of that,” said Mr Miller, whose company invested in Big River during their IPO in 2017.
This was an unusual move for NAOS Asset Management who typically avoid investing in IPOs.
“This example was different, because it had such a long history,” Mr Miller explained.
Big River has since doubled in size, expanding to 21 sites across Australia.
“We believe there is a material opportunity to grow this footprint much larger than 21 sites,” he continued, citing similar private companies as comparable examples.
“With these businesses, when you get scale and the cyclical nature of the market works with you, there’s a lot of leverage to the bottom line,” he added.
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Luke Winchester – Founder and Portfolio Manager - Merewether Capital
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Meet the Manager
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The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.
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