The acquisition of much larger Fleetwood Homes by manufactured and modular home builder Cavco Industries, Inc. of Phoenix, Arizona, originated during the 2008 financial crisis when Third Avenue Value Management Fund, which has been following the MH industry, contacted Cavco’s CEO Joe Stegamyer and together they purchased bankrupt Fleetwood in a 50-50 deal. In 2010 a similar scenario occurred when Palm Harbor Homes declared bankruptcy, so Third Ave. and Cavco again teamed up and acquired five manufacturing plants, 49 retail outlets and 100 percent of the common stock of insurance and financing subsidiaries that had not filed bankruptcy, according to gurufocus.com.

Further comments from Third Avenue Management’s 2nd quarter shareholder letter reveal the Fund sold its stake in Fleetwood for 21 percent of Cavco’s stock last year, which it received at $49 per share compared to $78 at quarter’s end on the Big Board. The Fund further states although there is a distinct paucity of MH financing currently, it will open up as Freddie Mac begins buying manufactured housing community developers debt, and the MH industry continues to garner an increasing market share of the overall home building industry.

Finally, as MHProNews has learned, “Cavco’s strong balance sheet with $73 million of cash and no debt (excluding non-recourse finance subsidiary debt) positions the company to make additional acquisitions or investments to drive further growth. Cavco’s management team, led by Chairman and CEO, Joe Stegmayer, has proved to be very capable in both making and integrating acquisitions.” ##

(Image credit: Cavco Industries, Inc.)