Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Landsea Homes Corporation (LSEA) by @InvestSpecial on X (Twitter). In this article, we will summarize the bulls’ thesis on LSEA. Landsea Homes Corporation (LSEA)'s share was trading at $11.28 as of 27th May. LSEA’s trailing and forward P/E were 43.38 and 15.46 respectively according to Yahoo Finance.
A residential neighborhood with a new construction house, a symbol of the bank's success.
LSEA, a rapidly expanding regional housebuilder based in Dallas, Texas, is currently trading at a 50% discount to its tangible book value (TBV), despite significant growth momentum. The company operates in high-demand markets across the U.S., including California, New York, Florida, and most recently Boston, with a diversified portfolio spanning suburban homes to large-scale master-planned developments. Mill Road Capital, a small-cap activist fund holding a 6.5% stake, has initiated a strategic push, urging management to consider alternatives, including a potential sale.
The activist has nominated three directors ahead of the upcoming AGM, signaling a more aggressive engagement strategy. They argue that LSEA, constrained by its high leverage and modest $260 million market cap, lacks strategic flexibility, making a sale the most viable path to unlock value. In such a scenario, they suggest a valuation near 1x TBV, implying a 100% upside. While LSEA’s leverage is indeed the highest among peers—contributing to its current undervaluation—it is also the fastest-growing.
Home deliveries surged 60% year-over-year in Q4 2023, with monthly sales pace up 23%, and another 15% delivery growth expected in 2025. These fundamentals suggest that despite its debt burden, LSEA warrants a valuation closer to 0.7x TBV, reflecting a 30–40% premium rather than the full peer-level 1x TBV proposed by the activist. Thus, while a sale might unlock value, the activist’s expectations may overshoot realistic outcomes, especially given the structural leverage and sector dynamics. Nonetheless, strategic pressure and performance momentum place LSEA at a critical and potentially transformative juncture.
Previously, we have covered Landsea Homes Corporation (LSEA) in April 2025, wherein we summarized a bullish thesis from InvestSpecial on Twitter. The author highlighted LSEA’s strong growth trajectory, with a 60% year-over-year surge in home deliveries and continued expansion into high-demand markets like Silicon Valley and Florida. Despite trading at a 50% discount to tangible book value due to high leverage and a small market cap, activist interest from Mill Road Capital has introduced a potential revaluation catalyst, including a possible sale. The stock is up by 90.21% since then.
