Thor Industries

so when we go into the first component of buying great businesses i basically break it down into three components the first is that it has to have some sort of personal meaning to me and so it has to be a business that i'm personally interested in an industry that i'm interested in learning about all the time and it's got to be within my circle of competence an area of business that i can understand and for a lot of beginners people might wonder what is my circle of competence i haven't run a business i haven't even you know worked in the workforce maybe Um, but basically you can just start with business models that are easy to understand.

So my biggest investment is Thor industries and it's an RV company or caravan manufacturer.

And it's really simple when the dealerships.

sell uh caravan they order another one it's basically a one-to-one replacement from retail sales so it's really easy to understand um you can just look at how much the retail sales are growing in the industry look at the market share of your own of the business in that industry and it's really easy to work out where the business is going so that's the first part that i actually

It'll actually make their ROIC worse if they leave it in the business.

A couple of other things I like to look at in terms of management is whether the founders are still in the management.

And going back to my biggest investment, Thor Industries, the founder is still the chairman and the other founder, he was the co-founder, the other founder unfortunately passed away, but he was the CEO up until 2014.

So there's still you want to know that the people who created the business, the people who came up with the idea and have the vision for the long term are still in power in the business.

I've done this in other categories.

I was in the RV industry working for Thor Industries, which ...

And they own, like, um, Autodesk and Jayco and Keystone.

Never been in an RV, never owned one.

Today, we're looking at, drum roll please, [drum roll] Winnebago.

[laughs] [beep] So today, we're gonna be looking at Winnebago Industries, and this one should be quite interesting because many of you would know that I hold Thor Industries in my portfolio, and Thor Industries is a direct competitor to Winnebago.

So I think you guys will be interested to hear my perspective on Winnebago, um, and I think it's a really great company in isolation, but I'm also gonna talk about how when you compare it to something like Thor Industries, why I think Thor Industries is superior.

And of course, uh, be aware that my opinions in this video are extremely biased because I do hold Thor Industries.

So naturally, going into this, um, even though I have looked at Winnebago before I invested in Thor Industries, obviously, I think that Thor Industries is superior in terms of an, an investment than Winnebago, otherwise I would have invested, uh, in Winnebago.

But it'll be interesting for me to share with you my perspectives on the two and sort of compare them throughout the video.

Um, and a number of you requested that I look at this stock, so I thought that I would.

So if you do enjoy this video, make sure you become a subscriber, hit that subscribe button, and make sure you hit that notification bell so that you don't miss out on any of the future videos coming out in the future.

Keep it at around 20 to 25% of my portfolio.

So if Thor Industries continues to fall, which it probably will, especially if we go into a recession, we will probably see, uh, Thor's earnings, uh, slow down dramatically, uh, and then we'll see the stock price come down further.

Um, and if it does, that means that the position, my Thor position in my portfolio will shrink, and therefore I will be able to add some more and bring it back up to that 20 or 25% position.

But essentially, I'm waiting now until it hits about 50 or $60 per share to make my next investment.

And the reason I'm doing that is because when I make my next investment at that price, I'll be able to bring my average price paid for Thor Industries down to around 80 to $90, which is exactly where I want it, uh, when I max out that position.

So ideally, in the next couple we- couple months or whenever we have this recession and whenever Thor Industries continues to fall, if it hits 50 or $60, I will add some more to that position, and then I, I will have an average price that I'm very, very happy with.

And if it continues to fall even further below that, I d- I don't see how it could because, um, because of their book value, I don't think I could see it falling much further than 40 or $35 per share.

But even if it went that far down, um, I would even add some more, close out that position, finish it off, uh, and then I would have an average price of somewhere between 70 and $90 per share, which I think is a very good average price to have, uh, before Thor Industries starts to turn around, uh, when we get into the next cycle, maybe in five years or so.

That is insane, and it's not a sustainable level of growth.

And okay, maybe this company's fundamentals are awesome.

Maybe, maybe their fundamentals are growing at 900%.

Maybe it's completely justified.

21 million.

Now, you might think, "Whoa, 21 million, that's a lot." Their price right now, their price at the peak three days ago was over $20 billion.

$20 billion for a company that is bringing in revenue of 20 million.

That's a price to sales ratio of 1,000.