NEWSLETTER 70

November 11, 2014

THE FOCUSED STOCK TRADER

www.thefocusedstocktrader.com

GREEN BRICK PARTNERS, Inc.

GRBK- The Best Kept Secret on Wall Street
Green Brick Partners, Inc.

(NASDAQ: GRBK)

Green Brick Partners, Inc.

11/10/2014 Closing Price: $6.10
2013 Post-Merger Sales (mn): $168.6

www.greenbrickpartners.com/

NASDAQ: GRBK
11/10/2014 Market Cap (mn): $191.21
2013 Post-Merger Net Income (mn): $17

COMPANY DESCRIPTION
Green Brick Partners, formerly BioFuel Energy Corp., was founded in 2006 to build and operate ethanol
production facilities in the Midwestern United States. On November 22, 2013, the companys ethanol
plants and all related assets were transferred to lenders to eliminate all debt. Following its acquisition of
JGBL Capital, Green Brick sole business is housing.
On March 28, 2014, BioFuel received a proposal from James R. Brickman and Greenlight Capital, Inc. to
acquire all of the equity interests of JBGL Builder Finance LLC and certain subsidiaries of JBGL Capital, LP.
(collectively known as JBGL) for $275 million, payable in cash and common stock.
On June 10, 2014, the agreement between Mr. Brickman and Greenlight Capital was definitive and was
unanimously approved by BioFuels Independent Directors.
On October 27, 2014, the acquisition of JBGL was completed and the following day BioFuels changed its
name to Green Brick Partners and started trading under the ticker GRBK on the NASDAQ.
Green Brick is now a real estate operator involved in the purchase and development of land for
residential use, construction lending and home building operations. Green Bricks predecessors were

JBGL Capital formed in 2008 and JBGL Builder Finance formed in 2010. Greenlight Capital provided a
majority of the initial capital for both entities, with Mr. Brickman providing the remaining capital. JBGL
Capital and JBGL Builder Finance are engaged in all aspects of the homebuilding process, including land
acquisition and development, entitlements, design, construction, marketing and sales of various
residential projects in master planned communities, primarily in the metropolitan areas of Dallas and
Fort Worth, Texas and Atlanta, Georgia. Green Brick currently owns or controls approximately 4,600
home sites in prime locations in the DFW and Atlanta markets, 50% controlling interests in several
builders and provides construction financing for approximately 900 homes annually.
The company has grown extremely rapidly. From $2.5 million in revenues in 2009 to $207.3 million at
the end of 2013 representing a 202% compound annual growth rate. This is all during a period of
depressed housing market where housing starts are extremely depressed. For the first nine months of
2014, revenues continue to grow rapidly at 22% year on year.

GRBK CONSOLIDATED INCOME STATEMENT

Sale of residential units
Cost of residential units
Gross profit on sale of residential units
Sale of land and lots
Cost of land and lots
Gross profit on sale of land and lots
Total Revenues
Total Gross Profit
Salary expense
Management fees expense related party
Selling, general and administrative expense
Interest expense
Depreciation expense
Interest and fees income
Interest on direct financing leases income
Profit participation on notes receivable
Other (expense) income, net
Net Income before taxes
State tax expense
Net income
Less: net income attributable to non-controlling interests
Net income attributable to controlling interests
PRO FORMA INFORMATION (UNAUDITED):
Net income attributable to controlling interest
Pro forma provision for income taxes
Pro forma net income attributable to controlling interest

2013
2014
125,756,100
144,585,516
(90,908,886) (105,843,593)
34,847,214
38,741,923
20,870,651
33,942,433
(13,381,238)
(25,329,341)
7,489,413
8,613,092
146,626,751
178,527,949
42,336,627
47,355,015
(6,655,753)
(645,899)
(4,503,376)
(313,378)
(139,127)
1,302,307
831,632
511,044
397,122
(9,215,428)
33,121,199
659,697
32,461,502
9,302,364
23,159,138

(9,608,228)
(1,159,688)
(9,412,044)
(1,015,561)
(414,540)
295,124
567,835
472,655
(20,274,447)
27,080,568
337,790
26,742,778
8,290,366
18,452,412
18,452,412
(7,380,965)
11,071,447

As illustrated in the Pro-Forma Financial Statement of JGBL above, Green Brick Partners acquired 2013
revenues of $207 million and net income of $44 million. Green Bricks current market capitalization is
$191.2 million and net debt is $99.23 million bringing total enterprise value (EV) to $290.44. Green Brick
Partners also has net operating loss carryforwards of $179 million, which at a tax rate of roughly 35%
will create an additional $63.4 million in value from taxes not paid. These deferred tax assets start
expiring in 2029 and will be fully utilized well before. Removing the value of deferred tax assets from the
companys EV leads to an EV of $227 million and an EV/2013 operating profit = 11.24. JBGL grew
earnings by 113% in 2013 and 15% in the first six months of 2014.

DR Horton
PulteGroup
Lennar
NVR
KB Home
Comp Average
GRBK
Upside to Comp Ave

EV/2013 EBIT 4Yr Rev CAGR

16.84
14.4%
14.44
8.6%
20.77
17.4%
13.12
11.4%
29.87
3.5%
19.01
11.1%
11.24
201.5%
69.1%

The five largest homebuilders have an average EV/2013 EBIT of 19.01x with much slower growth than
Green Brick. If Green Brick were to trade in line with its peers, there is 69.1% upside.
As of October 31, 2014, Greenlight Capital, Inc owned 49.9% of Green Brick. David Einhorn, one of the
best-known and most fundamentally driven investors on Wall Street, runs Greenlight Capital. Einhorn
founded Greenlight Capital in 1996. Since inception, Greenlight Capitals investment performance has
been outstanding returning 25% per year compare to S&P 500 returns of 5.56% per year.
ThirdPoint is the second Wall Street Hedge Fund in the deal. ThirdPoint LLC is run by Daniel Loeb
another titan of Wall Street. Like Greenlight Capital and David Einhorn, ThirdPoint is known for its
fundamental approach to investing. Mr. Loeb founded ThirdPoint in 1995 and, similar to Greenlight
Capital, has generated annualized returns of roughly 17.5% per annum since inception in December
1996 compared to an S&P 500 return of 7.5% over the same period. On October 31, 2014, ThirdPoint
own 16.72% of Green Brick Partners.
The CEO James Brickman owns 5.32% of the new entity. Other investors participating in the rights
offering include JMB Capital Partners Master Fund, L.P., Lonestar Partners, LP, North Run Master Fund,
LP and Scoggin LLC.
Conclusion
Green Brick is an attractive special situation. Green Brick allows investors to participate with some of
leading Hedge Funds on Wall Street. Green Bricks is a very profitable company trading on 11.24 times
earnings with earnings growth of over 100% in 2013. The companys multiple is a significant discount to
the largest homebuilders, all of which have much lower growth.