A 20-year hedge-fund vet shares the 3 stocks he thinks make the perfect play for a booming housing recovery as the US heads for the suburbs
and CEO of Mongolia Growth Group, a $6.3 million real-estate investment firm, thinks the boom is just getting started. "The core of what I do is inflection investing — finding a theme that's inflecting better and get there before anyone else realizes it," he penned in a recent.
"With that preamble out of the way, today the government announced that seasonally adjusted new home sales for August hit 1.011 million. For those keeping score at home, this is the highest that this figure has been since 2006 and up 43% from last year."Kupperman relays a plethora of factors — low interest rates, affordability issues, and years of leisurely housing construction to name a few — to support his powerful conviction surrounding the space. But Kupperman's interpretation and assessment of the housing market is nothing new — and he knows that., city-dwellers have slowly abandoned their posts in favor of a more suburban lifestyle with a cheaper price tag.Now, Kupperman thinks that slow and steady slog will soon transform into one of urgency. "The real catalyst is the sudden panic migration from cities," he said. "Rather than go into politics, it's useful to remember that increased crime, arson and tear-gas don't make things enjoyable in a city — especially when your rent is eating up most of your paycheck." To Kupperman, the emergence of the pandemic, coupled with the notion that many larger cities have experienced an uptick in rioting and property destruction, is a game-changer. It's an essential diagnostic that his call rests upon. "As a result, there's been a massive flight from cities by those who can afford to leave," he said. "As these macro and social trends converge, there's been a huge increase in demand for single family and multi-family property in the suburbs and exurbs—particularly in more affordable parts of the country." Still, Kupperman isn't interested in buying up real estate or looking to purchase homebuilding stocks to benefit from the trend. He's using a different approach. "As many of us have learned, homebuilding is a mediocre business at best," he said. "Instead, I'm playing this trend through the suppliers to single-family and multi-family homebuilders." Kupperman's approach to the space is reminiscent of the age-old "pick-and-shovel" investment strategy, which focuses more on components and underlying technology rather than the end product itself.
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