Episode summary
The Best Business You've Never Heard Of? | Todd Wenning
The Acquirers Podcast
· · 59 min · Hosts: Tobias Carlisle, Jake Taylor · Guests: Todd Wenning
Summary
Todd Wenning argues that Howdens Joinery, the UK kitchen and joinery supplier trading as HWDN, is a high-quality business that the market may be underappreciating because it is nearing saturation in its home market. He highlights the company’s trade-only model, dense depot network, consistent gross margins, and ownership culture at the depot level, saying those features make it unusually efficient and scalable. His central idea is that the company has option value in the US, where a similar depot model could be built over time if management chose to invest there.
Wenning thinks the current valuation around 15 to 16 times earnings reflects modest growth expectations, but he sees room for mid-teens earnings growth if housing conditions normalize and the company keeps expanding beyond kitchens into bedrooms and possibly bathrooms. He also notes that management appears to want growth, citing the DIY Kitchens acquisition for about 370 million pounds, but he believes the US could have been a better long-term capital allocation choice.
He uses Ferguson and Watsco as comparable industrial/distribution businesses, and says he prefers companies with durable demand, strong management, and aligned incentives. He also discusses housing, arguing that 7% mortgages and frozen transaction volumes are keeping the US housing market stuck, which may indirectly support remodeling rather than moves.
Key takeaways
- Todd Wenning says Howdens could eventually build a US network as large as its 800-plus UK depots, making the stock a long-dated option on American expansion.
- Todd Wenning estimates Howdens trades around 15 to 16 times earnings and could still offer mid-teens earnings growth if housing and rates normalize.
- Todd Wenning views Howdens’ depot-level profit sharing as a self-regulating incentive system that helps sustain its 60% gross margin business model.
- Todd Wenning thinks the 370 million pound DIY Kitchens acquisition shows management wants growth, but he would rather have seen capital deployed into the US.
- Todd Wenning compares Howdens’ business-to-business model favorably with failed UK retail incursions into the US, citing Ferguson as a better precedent.
Notable quotes
“So, I just wrote this big report on a company that's based in the UK called Howen Joinery”
“They are great communicators. They've got great artwork. It's very kind of um irreverent, right”
“It's a Footsie 100 company with a market cap still in the single digits”
“they have an ownership culture at the depot level”
How the episode opens
We're live. This is Value After Hours. I'm Tobias Carlile, joined as always by my co-host Jake Taylor. Our special guest today, Todd Wedding. He's a repeat guest. How are you, Todd? Good to have you back. — It's great to be here. Thanks, Dobby.
Repeat offender. — You you sent through a new report that you've put together uh recently. Take us through the uh take us through the report. — So, play, huh, Toby? Just going going right at it.
So, I just wrote this big report on a company that's based in the UK called Howen Joinery. Uh, UK investors probably know it very well. Uh, US investors probably don't have them.
It's HWDN in London. Uh, so if you want to buy the shares, it's primarily through the London market. There are some OTC shares, but you got to be really careful with those uh because they're not very liquid.
And so if you're going to venture that way, make sure you look at the the limit orders on those. But uh so this is a a big UK company. It's a Footsie 100 company with a market cap still in the single digits.
So you think about compared to the US market, it would be a small cap, but in the UK it's a member of the Footsie 100. So very well-known company in the UK. Um, and so couple years ago I posted on X and I said, I guess it was Twitter back then and said, "What are some companies in Europe that are high quality that Americans probably don't know anything about?
And Haladins came up to me multiple times from people saying, "Hey, you got to look into this company. Which, you know, was a good hint that maybe I should take a closer look.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- value investing
- market crash resilience
- portfolio hedging
- hvac and housing dynamics
- ai and the future of work
Companies and tickers mentioned
- DIS
- Howdens
- Disney
Watch the episode
Watch “The Best Business You've Never Heard Of? | Todd Wenning” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Acquirers Podcast, this episode and its artwork belong to Tobias Carlisle. Octagon is not affiliated with the show; this page is an independent summary.
