The Misfits: UFP Industries (UFPI)

There are a few tell-tale signs that UFP has an incredible corporate culture that more companies should replicate. Those that have also produce market-beating results.

Lumber Industry, William Arthur Cooper, 1934, oil on canvas (Smithsonian American Art Museum)

My family has been in the logging and lumber business since the 1940s. I can happily say I’m not in the family business.

My modest exposure told me a few things. It’s a hard business for which few people are cut out. It’s a good, not great, industry with many operational hazards. Even with a hawk-like eye on costs and a mind for efficient supply chain management, it is still a relatively low-margin business. And loggers are always belly-aching about the prices sawmills offer for lumber. (that last one is backed by academic study)

If they are all moaning about mill prices, then mills have to be a good business, right? That certainly seems to be true for UFP Industries (NASDAQ: UFPI). The mill and lumber processor has more than tripled the returns of the S&P 500 since going public in 1993.

The deeper I read into the company, the less I thought its stellar performance was a product of its industry. I would argue that the corporate culture it has employed is the most prominent indicator of its success and that culture could be applied to a myriad of industries and produce great results. There are even receipts to show it working elsewhere. 

Let’s take a closer look at what makes UFP Industries tick and why we, as investors, should seek out and advocate for more companies to employ corporate policies similar to UFP. 

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