Carlo Cannell, “The Iron Ranch”

By Travis Johnson, Stock Gumshoe, April 3, 2014

These are my notes and instant reactions from a presentation at the Value Investing Congress, the notes below might contain errors, paraphrases, incorrect quotes, or misinterpretations.

Carlo Cannell has presented at past Congresses, though I don’t know if I’ve written about him before. He argued that boring and mundane industries are the way to go… razzle, dazzle bunk and gibberish tech companies that make no money. He’s preaching to the choir, saying that you build wealth with boring, comprehensible companies — ‘sexy dullards”.

He gives a few examples:

US Concrete: Cement — demand for concrete has always grown, sometimes with peaks and valleys, but it’s a product without subsitutes, it’s fragmented, local producgion and delivery create a moat, in down cycles there are opportunities to buy distressed assets.

“The Iron Ranch” — second largest producer of manufactured homes in the US.

Manufactured houses can cost half as much as a site-built house — and the market peaked in the late 1990s.

What’s the company?

Number two producer behind Clayton Homes (owned by Berkshire) … and at only 45% of capacity they have plenty of room to grow without major investment. They are highly levered to the single family home market, and they could grow to more than $10-15 in earnings.

The stock is Cavco (CVCO)

Second example: Build a Bear Workshop (BBW) — a “work in progress” that collapsed as a growth darling, but is in turnaround now with new management last Summer.


Strong brand, so it’s easy to license and wholesale. They have fanatical customers with minimal marketing.

They are pruning stores and refreshing stores, then expanding customer base to licensing and franchising, expanding to open new store formats.

He says he’s focused on companies who slowly create wealth rather than those who transfer wealth from shareholders to management in sexy loss-making tech companies.

Pretty quick and superficial presentation — I do find BBW somewhat appealing because of their “hidden” brand value, but haven’t looked at the details. And I’ll happily let my Berkshire Hathaway shares account for my exposure to the housing market at this point.

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