IN THIS EPISODE, YOU’LL LEARN:

• How Brad Jacobs built multiple billion-dollar companies from scratch
• The structure QXO used to go public fast
• How Beacon Roofing was acquired despite a poison pill defence
• What Kodiak added to QXO’s geography and product mix
• Why the TopBuild deal is a game-changer for margins
• How QXO plans to unlock synergies across its portfolio
• Why Jacobs’ approach to dilution mirrors Henry Singleton’s playbook
• About the thickness of QXO’s competitive moat 
• The three biggest risks that could derail QXO’s vision
• What bull, base, and bear cases reveal about fair value
• And so much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Kyle Grieve: He’s done it multiple times before. United Waste Systems, a 55 percent CAGR bet, XPO a 50 bagger. Building multiple billion dollar businesses has been nearly automatic for Brad Jacobs, and now he has his sights set on rolling up the fragmented roofing and building products industry with his newest business, QXO, with an audacious goal of 50 billion revenue in just a decade’s time.

[00:00:22] Shawn O’Malley: A manager this skilled and capital allocation, finance and integration across multiple industries only comes along a few times in a generation. But the real question is whether Jacobs can roll up a commoditized industry and defend margins that don’t have obvious barriers to entry.

[00:00:40] Kyle Grieve: And that’s totally fair. But here’s the thing with QXO now at 18 billion dollars in pro form revenue after the Top Build deal closes, QXO procurement advantages, cross-selling capabilities, and ability to leverage technology is set to really take off. The scale benefits alone act as a weapon against smaller rivals who just lack the volume to match QXO.

[00:01:01] Shawn O’Malley: Well, we’ll dive more into that, as well as how QXO is financing this flurry of deals and what it would take for QXO to reach its goal of fifty billion dollars in revenue with 15 percent EBITDA margins.

[00:01:17] Intro: Since 2014, with more than 200 million downloads. We have interviewed the world’s best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly and sharing everything we learn with you. This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now, for your hosts, Shawn O’Malley and Kyle Grieve.

[00:02:03] Shawn O’Malley: Hey folks, since we started the Intrinsic Value podcast over a year ago, we have discussed a number of businesses run by incredible capital allocators. And today we have many of them inside our portfolio, from Brian Chesky at Airbnb to Steve Huffman at Reddit, or even Sundar Pichai of Alphabet. We have some executives who are masters at value creation, but today we are going to look at an executive who has one of the best track records of creating shareholder value that I’ve ever come across, and that’s because he’s done it multiple times.

[00:02:37] Kyle Grieve: That’s right, Shawn. And the executive is a man named Brad Jacobs, who isn’t quite the household name of Jeff Bezos, Bill Gates, or Elon Musk. And that’s simply because his businesses aren’t particularly glamorous. But he’s created half a dozen public companies, many of which were just enormous successes.

[00:02:51] Kyle Grieve: Take United Waste Management Systems. This was a business that rolled up the fragmented waste management industry, and from its 1992 IPO to its eventual 1997 sale, shareholders achieved an incredible 55 percent compounded annual return. Now, with that business being a clear success, Jacobs then decided to hit the repeat button. And for shareholders who have held the business since its inception, they would have a 200 bagger on their hands.

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BOOKS AND RESOURCES

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