Tuesday, August 7, 2007

Drywall Maker in Pain as Housing Suffers

When a business is trading at a lower price than several proven value investors (including Mr. Buffett) last bought shares, it is usually a good place to start your research.

USG is such a company and the NY Times recently wrote an short article about the company.

“Business is tough,” said William C. Foote, chairman and chief executive of USG. “The housing recession is entering the second year of what is likely to be a multiyear downturn.”

USG has cut 1,100 jobs during the last year and now employs about 14,000.

In some ways USG represents the reverse of the modern global economy. It faces no significant foreign competition because drywall is too bulky and low-value to be shipped very far. But USG likewise has little opportunity to send its product abroad to countries where home building is not currently depressed, holding the company hostage to domestic construction.

*This is not a recommendation to buy or sell a security. Please do your own research before making an investment decision.