Michael Burry Just Bet On This Housing Stock

So, Michael Bur, the investor that was made famous in that movie called The Big Short, he just told his Substack readers that he bought shares of a company called QXO and the stock jumped immediately by over 7% on the news. Now, he didn't just buy the common stock. He actually bought a piece of the preferred stock, which basically is a version of the stock that pays you a dividend while you wait. and his thesis was actually pretty simple. Basically saying that the stock is way down and he sees an opportunity to jump on board. And that's the part that I want to focus on today because QXO stock is down. It's actually down a lot. Back in February, QXO stock made a 52- week high near $27 per share. Today, it's trading closer to $12. So, in about a seven-month period of time, the stock has been cut by nearly half. And and most people see a stock chart like that and they come to maybe two conclusions. Either the company is clearly struggling or the sector that they're in is so dead that anything related to it is also struggling. And look, the housing market, which is the market that QXO is in, it's really bad. I'm not going to sit here and deny that. But here's the thing though, the bad housing market is not a problem for this company. In fact, it's a huge opportunity. But more on that in a minute. On today's video, I'm going to walk you through what QXO actually does, the big acquisitions that it's made over the past year or two. And then I'm going to give you two ways to kind of approach the stock from an investor perspective. And one of them actually doesn't even involve buying the stock. So, let's start with kind of the basics here. A little bit of history, though, because I've actually been covering QXO stock for a while. Back in 2023, before this company was even called QXO, it was actually a tiny little software company called Silver Sun. And I called it the best penny stock for 2024. And the only reason why I did that was because Brad Jacobs showed up and put a billion dollars into this company and really started turning it into the company it is today. Now, if you don't know who Brad Jacob is, he's the guy behind Waste Management, United Reynolds, Expo Logistics, among other multibillion dollar companies. for his entire career. Brad Jacobs finds these boring, fragmented industries that nobody cares about, like tool rental, uh, garbage collection, shipping, logistics. He goes in, he buys up a bunch of companies in this sector, and he combines them into a much larger company. Essentially, a rollup strategy. And I think what's amazing is most startups or growing firms, they stay private for a really long time only to go public once the stock is kind of reached massive scale and the insiders have made a bunch of money. But Brad Jacobs actually does the opposite. QXO is in just the beginning of its growth journey and retail investors like me and you and just anybody can join in. Now, I've experienced growing an investment alongside Brad Jacobs before. The house I'm sitting in right now recording this video was more or less paid with XBO Logistics stock. And that was the venture that Brad Jacobs had before he got into QXO. So, the truth is I'll follow Brad Jacobs for the rest of his career. It doesn't matter what he's doing. So, let's start with what QXO actually does. So they're in building product distribution. So a distributor, as I'm sure most of you know, is essentially a middleman. So companies that make building materials like roofing, tiles, insulation, they don't sell directly to the contractor building the houses. There's a distributor sitting in between. He buys the stuff in bulk. He keeps it in warehouses and he gets it to the contractor when they need it. Think of QXO kind of like the Costco for contractors. It's certainly not a glamorous business, but it's a business where scale really matters because the bigger you are, the better price you get from the manufacturers and the more delivery trucks you have and the more locations you have, the more contractors just end up calling you whenever they have a big job. And the industry is full of small family-owned lumber yards, roofing supply companies. In fact, there's thousands of them. That's exactly what Brad Jacobs likes. Now, let's talk about the business QXO has already bought and kind of rolled into the company because there's actually three big ones to talk about. The first one is Beacon, which closed back in April of 2025. That's a roofing distributor. It's actually one of the biggest in the country and it was about 11 billion deal and roofing is a nice business because there's a lot of replacement obviously. So a storm come through, a roof gets old or somebody sells their house and the insurance company says we're not going to insure that until it gets a new roof. Ask me how I know about that. And not only that, it's obvious that every house needs a roof. The second business that they bought was called Kodiak Building Partners, which closed, I think it was in April of this year, for about $2.5 billion. And Kodiak is in the industry called LBM or lumber and building materials. So in in simple terms, it's a lumber yard. That's all it is. So, it's wood, it's trusses, it's windows, it's doors for the homebuilders and all these types of things. Then there was the big one. It's called Top Build, which closed in July for about $17 billion. Top Build was one of the largest distributors of insulation in North America. And what's interesting is they're also an installer because they don't just drop off the insulation. They've actually got crews that will put the insulation inside of the building. That's kind of an interesting business. Now, Top Build did about uh $6.2 billion of sales last year with about a little over a billion dollars in Ebida, which is more or less operating profit before interest in taxes, which is significant on a business like this, but it's profitable. Not only that, Top Build had some data center construction business as well. So, it it kind of helps that business in a softer residential housing market. So, if we put all of this together, QXO is tracking anywhere between right around $20 billion in revenue for a 12-month period of time. And the goal that Brad Jacobs had when he put QXO together was for $50 billion of revenue by 2030. So he's actually a little under halfway there. And so that kind of brings me to how you want to approach this stock from an investment standpoint. You can buy it like I have and hold it and you can just wait. You're not buying this for next quarter. In fact, you don't care about next quarter. You're not even really buying it for next year. I don't really care. you're buying it because Brad Jacobs has a 5 to 10year plan to build the biggest building product distributing company here in North American. Honestly, that's how I own the stock. Every time it goes down a little bit, including last week, I buy some more and I forget about it. And look, that's exactly what I did with XBO stock over 15 years ago. I bought the stock after one of the worst recessions in American history, the Great Recession, and transportation logistic companies were in the dumps. Everybody was telling me not to buy the stock. I bought XBO Logistics. I waited about 5 years and boom, I mean, the stock skyrocketed and I made about a quart million dollars and I put it into the house that I'm sitting in today. So, that's one way to look at this. Now there's a second camp and I actually think this is a perfectly reasonable way to approach this stock. That investor says why am I going to sit in this stock for two or three years while I know housing is going to be a disaster. So the second way to approach it is just put QXO on your watch list and maybe monitor it every 3 to four months. You wait until mortgage rates start to come down a little bit. You wait for existing home sales here in North America to maybe start moving higher. You wait for Home Depot and Lowe's to stop talking about how tough the housing market is on every single one of their conference calls, which I look at every quarter, and you just wait. Now, look, the stock market isn't dumb. Investors aren't dumb. They'll see the housing market begin to turn months, if not a year in advance. But you actually skip waiting maybe two 3 years, maybe even longer sitting in something like this that is likely to just chop sideways for a while. But here's the part that I like the most. This is why I'm loving this company right now. In fact, I'm more excited about QXO today than I was back in 2023. Think about the companies that QXO wants to buy right now. You've got some familyowned roofing supply company sitting in Ohio or a lumber yard in Texas. They've been dealing with a slow housing market for 3 years now. Volumes are down. Margins are absolutely getting crushed by inflation and gasoline charges and tariffs. Their customers are also paying much slower. And the owner of the business is probably 65 years old and he's wondering why the heck is he still doing this? And guess who's going to buy his business? Probably QXO. And so for the next couple of years, Brad Jacobs is going to go buy these businesses that are completely depressed and on depressed earnings and sales and from sellers that actually don't have a lot of other buyers. That is a dream setup. If you're doing a rollup strategy like QXO, you don't want to be QXO doing this in a hot housing market where every lumber yard owner out there thinks his business is worth 15 times earnings and there's three other bidters on the property. You want to be doing this right now. And I think that's what Michael Bur is seeing too. He even said it when he bought the preferred shares that the dividend that he receives provides some downside protection. That's a guy who's telling you he's willing to wait this out. So, here's kind of the bottom line. The worst time to run a building products business is the best time to buy one. And that is what Brad Jacobs is doing right now. So, to recap, QXO is Brad Jacobs rolling up building product distribution companies like roofing with Beacon, lumber with Kodiak, and insulation with Top Build. If you trust that he's going to do the same thing with QXO that he did with Waste Management, United Reynolds, Expo Logistics, among others, you approach this the same way. You buy it, you hold it, you wait, and you just wait to cash in years later. That's what I'm doing. If you don't want to sit through a slow housing market, approach number two is just wait for these interest rates and home sales to start to turn around. Maybe in a year or two. Now, you might have to pay a little higher price for QXO, but you do reduce your risk quite a bit. And the reason I think this is an interesting opportunity is a bad housing market is exactly when a company like this should go out and buy other struggling companies in the space. That's because QXO comes out on the other side of this, having fewer competitors and a lot more scale within the industry. That was today's video. That was QXO. I'll see you again later this week. Good luck with your investments.