Hovnanian's CEO Foresees Housing Recovery

President and CEO of Hovnanian Enterprises (HOV), Ara Hovnanian, declared in the recent 4th-quarter conference call that his company “has the liquidity to ride through the difficult housing environment” and emerge “very well positioned to participate in the eventual recovery.” Hovnanian believes his company has the edge over other builders through “long term strategies of offering a broad product array” in nationwide markets. With over 800 million in cash and no significant debt covenants maturing over the next 3 years, Ara Hovnanian could emerge as the proverbial “Comeback Kid.”

Ara’s staunch conviction, abundant cash position, and oversold stock price makes HOV attractive. Current short positions are overdone with 40% of the float sold short. This could fuel a 2-3 day short-cover rally that could result in an abrupt upward surge. Ara has been playing his cards close to his chest and may just surprise the market as DHI did with its recent earnings surprise.

The December 08 “Existing Home Sales” numbers provided strong evidence that qualified buyers are actively buying single family homes again, and are most likely signaling a bottom in housing prices. Factor in a 4.5% or 5% interest rate, tax refunds on the way to buyers, and the knowledge that the hottest season for real estate is just beginning in earnest (February – June comprises 60% of all home sales), and you too may conclude that now is the time to buy.

We are definitely buyers at this level.

Disclosure: Long HOV.

Comments

[J one:]

If you like Hov you must love beazer

Feb 05 10:43 AM

[chazzster:]

great stock at this price! go ara go!

Feb 05 10:55 AM

[mbborak:]

Good for a quick pop, nothing more. I expect people to get pretty excited about this tax refund, so we will probably see an uptick in home sales soon. After that, it depends upon the level of unemployment as nobody without a job (or fearing for their job) will think about buying a house.

A lot of those who speculated last year and thought they were buying at the bottom are now foreclosing and selling at a loss. I expect this to repeat a few times before a real bottom occurs, so this stock is either good for a short-term bounce or a long-term buy.

Feb 05 11:12 AM

[Mr. Ed, Jr.:]

This column could have been written by the NAR. It reads like one of their press releases.

Feb 05 12:31 PM

[wkdavis:]

How can you put Hovnanian on the top sheet when they are facing foreclosures such as the one in Greene Country VA last week?
Is there not a certain point at which horrible land speculation will lead toward a drain on that $800 million in cash?

Feb 05 05:18 PM

[t-bird:]

Other than Toll I would stay away from this sector.

For an insight into the housing problem an excellent article that was on Bloomberg earlier this week....

Read and heed this information, PLEASE!

www.bloomberg.com/apps...

Feb 06 08:44 AM

[RJ's a fraud:]

Your a fraud RJ. Please provide links to your advance trading concepts and your background. Your a pump and dump and should be in jail

Feb 06 11:56 PM