On December 31, 2024, Donald Smith & Co (Trades, Portfolio) executed a strategic transaction involving Beazer Homes USA Inc (BZH, Financial). The firm reduced its holdings by 12,944 shares, which resulted in a slight impact of -0.01% on its portfolio. This move reflects the firm's ongoing strategy to optimize its investment portfolio, aligning with its deep-value investment philosophy. The transaction price was set at $27.46 per share, and the firm now holds a total of 3,119,483 shares in Beazer Homes.

Donald Smith & Co (Trades, Portfolio): A Deep-Value Investment Firm

Donald Smith & Co (Trades, Portfolio), founded by Donald G. Smith, is renowned for its deep-value investment strategy. The firm focuses on identifying undervalued stocks with significant potential for earnings growth. With a portfolio comprising 61 stocks and a total equity of $4.18 billion, the firm has established itself as a prominent player in the financial services and basic materials sectors. The firm's top holdings include companies such as AerCap Holdings NV (AER, Financial), Eldorado Gold Corp (EGO, Financial), and Genworth Financial Inc (GNW, Financial).

Beazer Homes USA Inc: A Leader in Residential Construction

Beazer Homes USA Inc is a construction company specializing in residential construction across 13 states in the USA. The company targets a diverse range of homebuyer segments, including first-time, move-up, and luxury homebuyers, with an average selling price of approximately $300,000. Beazer Homes has a market capitalization of $766.972 million and operates in key metro areas such as Atlanta, Las Vegas, and Los Angeles. The company's focus on land purchasing and development supports its future construction efforts, alongside providing mortgage services to its homebuyers.

Transaction Details and Portfolio Impact

The recent transaction saw Donald Smith & Co (Trades, Portfolio) trading shares at $27.46, with the firm's total holdings in Beazer Homes now standing at 3,119,483 shares. This stock represents 2.02% of the firm's portfolio and accounts for 10.10% of the firm's holdings in Beazer Homes. The transaction aligns with the firm's strategy of maintaining a balanced and diversified portfolio, while also capitalizing on potential growth opportunities within the homebuilding sector.

Financial Metrics and Valuation of Beazer Homes

Beazer Homes is currently considered fairly valued, with a GF Value of $25.48 and a price-to-GF Value ratio of 0.96. The stock has a GF Score of 72/100, indicating likely average performance. The company's balance sheet ranks at 5/10, while its profitability rank is 6/10. These metrics suggest a stable financial position, with room for improvement in profitability and growth.

Market Performance and Growth Indicators

Since the transaction, Beazer Homes' stock has experienced a -10.49% price change, and a -17.49% change since its IPO. Key growth metrics include a 3-year revenue growth of 2.30% and earnings growth of 3.80%. Despite these modest growth figures, the company's focus on strategic land development and diversified homebuyer segments positions it for potential future growth.

Other Notable Investors in Beazer Homes

In addition to Donald Smith & Co (Trades, Portfolio), other prominent investors in Beazer Homes include First Eagle Investment (Trades, Portfolio), HOTCHKIS & WILEY, and Ken Fisher (Trades, Portfolio). These investors' involvement underscores the potential value and growth opportunities that Beazer Homes presents within the homebuilding and construction industry.

Transaction Analysis and Conclusion

The reduction in holdings by Donald Smith & Co (Trades, Portfolio) reflects a strategic decision to optimize its portfolio while maintaining a significant stake in Beazer Homes. The transaction's impact on the firm's portfolio is minimal, yet it highlights the firm's commitment to its deep-value investment philosophy. As Beazer Homes continues to navigate the challenges and opportunities within the residential construction sector, the firm's investment strategy remains focused on identifying undervalued stocks with promising growth potential.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.