What do you think about the special dividend that they announced of $0.50 per share? Are they running light on how they can deploy capital without eroding ROIC?
Good article. The only point of agreement that I have with you is that U-Haul's scaled dealer infrastructure provides tremendous barriers to entry. I think that you take the data of declining movers rate a little too lightly. Movement is often a result of major life events like marriage, a new job, birth of children, and sometimes death. Americans have been moving from one residence to another less and less over the years as a result of various factors. Just to name two that quickly come to mind:
1. lower marriage rates: ~80% of all households were comprised of married couples in 1949 vs. ~50% as of 2020. The less these events take place, the less movement will be generated as a result of marriages.
2. increasing share of women participating in the workforce: ~30% of married households in the U.S. were dual-income vs. 50% today. Moving decisions become incrementally harder to make when they affect two as opposed to one person.
Also, I'm not sure that COVID provides good indication of what the future of movement/migration might be. As remote-work accommodations gain greater acceptance amongst employers, getting a new job becomes less of a reason to move residence.
U-Haul has been able to grow decently over the years due to share gain and rental penetration. On a forward basis, it's worth thinking about how much of these two levers they've already exhausted before being squarely correlated to the actual number of moves that take place in the U.S.
Lastly, I'm not sure that scaled economies shared is a sound formula to use in the face of structurally declining end-market demand. With ROIC of ~11% on avg. from 2012-2019, it's worth asking if that's an acceptable starting base from which to make projections. As businesses grow larger, the opportunity set shrinks. With the current capital allocation policy, I'm not sure that investors are being compensated for the risk of what's always an unknown future, though in U-Haul's case quite predictable.
Great article! Also, shares have moved nicely lately. Congrats if you participated in the move.
As always, great work Sleepwell.
Did you build that chart back to 1971 on your own?!
Interesting take on a “boring” business on the surface.
Your analysis reminds me of the work of Nomad investments
What do you think about the special dividend that they announced of $0.50 per share? Are they running light on how they can deploy capital without eroding ROIC?
Good article. The only point of agreement that I have with you is that U-Haul's scaled dealer infrastructure provides tremendous barriers to entry. I think that you take the data of declining movers rate a little too lightly. Movement is often a result of major life events like marriage, a new job, birth of children, and sometimes death. Americans have been moving from one residence to another less and less over the years as a result of various factors. Just to name two that quickly come to mind:
1. lower marriage rates: ~80% of all households were comprised of married couples in 1949 vs. ~50% as of 2020. The less these events take place, the less movement will be generated as a result of marriages.
2. increasing share of women participating in the workforce: ~30% of married households in the U.S. were dual-income vs. 50% today. Moving decisions become incrementally harder to make when they affect two as opposed to one person.
Also, I'm not sure that COVID provides good indication of what the future of movement/migration might be. As remote-work accommodations gain greater acceptance amongst employers, getting a new job becomes less of a reason to move residence.
U-Haul has been able to grow decently over the years due to share gain and rental penetration. On a forward basis, it's worth thinking about how much of these two levers they've already exhausted before being squarely correlated to the actual number of moves that take place in the U.S.
Lastly, I'm not sure that scaled economies shared is a sound formula to use in the face of structurally declining end-market demand. With ROIC of ~11% on avg. from 2012-2019, it's worth asking if that's an acceptable starting base from which to make projections. As businesses grow larger, the opportunity set shrinks. With the current capital allocation policy, I'm not sure that investors are being compensated for the risk of what's always an unknown future, though in U-Haul's case quite predictable.
Great article! Also, shares have moved nicely lately. Congrats if you participated in the move.