Insider Buying Portends Better Times for Homebuilders? - Housing Market Tracker

Homebuilder Stocks

Fountain Park. Florida: “Centex Homes has started presales at Fountain Park in Polk City… Single-family homes will range from 1,433-3,514-sf and be priced from the $150,000s. Paul Schoettelkotte, VP of sales for Mercedes Homes in the Orlando region and Volusia County, said Mercedes is building 129 single-family homes at Lake Smart, including 25 that front on the lake… Homes at Lake Smart range in size from 1,532-3,340-sf.” (Orlando Sentinel, Apr. 13th)

Jim Rogers' Picks and Pans - Barron's Interview. “Investment guru Jim Rogers is short Citigroup (C) and Fannie Mae (FNM), along with the Amex Securities Broker/Dealer Index (iShares Dow Jones U.S. Broker-Dealers Index Fund (IAI)). He's also short U.S. homebuilders including Lennar (LEN).” (Eli Hoffmann in Seeking Alpha, Apr. 13th)

Old Favorites, New Picks Make For A "Hideous" Quarter For Mutual Fund. “Bill Miller's Legg Mason Value Trust posted the biggest first-quarter drop since opening 26 years ago… The $12.2 billion fund fell 20%… Miller's housing-related stocks, which he started buying about two years ago, include lender Countrywide Financial Corp. (CFC) and homebuilders Pulte Homes Inc. (PHM) and KB Home (KBH). The fund held 1.4% of its assets in Countrywide at the end of December, 0.8% in Centex Corp. (CTX) and 0.5% in KB Home.” (Bloomberg via Asbury Park Press, Apr. 13th)

Subdivision Work Stalled In Carson. Nevada: “Developers fought to get one of the city's largest subdivisions approved more than two years ago, but not one room at the Shulz Ranch has been built. Work on the 521-home development in South Carson City might not start any time soon either. Shulz Ranch Developers, managed by Lennar Communities (LEN) in Reno, defaulted on a $26 million loan on the property last month.” (Nevada Appeal, Apr. 13th)

New-Model Grand Opening At Carriage Estates Starts Buying Buzz. New Jersey: “To further stir up buyer interest, Carriage Estates is now offering two incentives. For a limited time only, qualifying buyers will receive a finished basement and a morning room, with the use of NVR Mortgage (NVR), a Ryan Homes subsidiary… Priced from the upper-$410,000s, the homes at Carriage Estates feature wooded home sites of up to half an acre.” (APP.com, Apr. 13th)

U.S. Housing Crisis Stifles Great Park. Orange County, California: [Three years ago,] Lennar Corp. [got] the right to build thousands of homes and millions of square feet of commercial, industrial and office space on the former El Toro Marine base… [by agreeing to] pay $200 million in development fees and donating the land for the park… Today, no homes are built at El Toro… though Lennar [paid] Irvine the $200M in development fees. But the city is also depending on the creation of a community facilities district on Lennar's land to raise an additional $200M for shared infrastructure. If the district isn't formed by July 2009, Irvine may require Lennar to pay up to $60M… for the shortfall.” (LA Times, Apr. 12th)

When The Surplus Of New Stock Rises, So Do Incentives. Houston: “Until April 13, Ryland Homes offered buyers of homes ready to occupy a $500 move-in incentive and up to $25,000 in cash that they can use on any combination of closing costs, price savings, design-center options and interest buy-downs… For those buying homes still to be built, Ryland was offering, among other things, an interest-rate lock and up to $25,000 in cash to use toward closing costs, price reductions or upgrades for qualified buyers who used their preferred lender. They also threw in a free 42-inch flat-screen TV and home theater system.” (Chron.com, Apr. 12th)

Centex Sells Portion Of Dove Creek Properties. California: “Centex Homes has sold the remaining, undeveloped portion of its Dove Creek housing tract in Atascadero to Corona Land Co. LLC… less than a year after Centex announced it would pull out of the Central Coast. Centex: The sale was part of a deal finalized March 31 to sell 27 properties in 11 states… The value of the properties sold [was] about $528 million. The Corona Land Co. is a joint venture led by RSF Partners Inc. under management by Farallon Capital Management LLC and Greenfield Parnters LLC. Centex has a 5% stake in the Corona Land Co.” (San Luis Obispo.com, Apr. 12th)

Insider Buying Offers Ray Of Hope For U.S. Housing. “Thomson Financial, industry insiders have snapped up a record $59.1-million (U.S.) worth of shares since November. NVR Inc. accounts for $52.5M of the total, (but) 14 other firms also having insider purchases over the last few months. Two insiders at Hovnanian Enterprises (HOV), for instance, scooped up more than $2M of stock. At Meritage Homes (MTH), three insiders spent more than $1.5M. And at M/I Homes (MHO), five insiders shelled out a total of more than $1M… The last round of heavy insider buying occurred in September, 2001, presaging a 79% increase in the S&P home builders index by the following June.” (Globe & Mail, Apr. 11th)

Montgomery, Fifty One Caught In A Down Market. “Two signature downtown San Jose properties - Divco West's Hotel Montgomery and Centex Homes' Fifty One cannery-turned-condo project - have been unloaded by their owners. Harry Mavrogones, head of San Jose's Redevelopment Agency, said earlier this week that after trying to sell the Montgomery since 2005, Divco West Properties gave the hotel back to its lender, Gramercy Capital Corp. And on March 31, Centex Corp. closed a massive portfolio sale that included property in 11 states as well as the historic Plant 51 cannery on The Alameda… Fifty One, under construction since 2004, has failed to sell even one unit.” (San Jose Business Journal, Apr. 11th)

More North County News. San Diego: “Home-sharing is a problem that has plagued the city's urban core… Representatives of D.R. Horton (DHI) told the council Wednesday that it had shelved the idea of providing 4BRs in 23 of its 92 condos in the Paramount development in downtown Escondido [and] promised to insert a clause into deeds that will prohibit owners from remodeling their units into four-bedroom homes. A similar clause will be written into the homeowners association's rules and regulations… When council members heard that…. they unanimously approved the development.” (Sign on San Diego, Apr. 11th)

Lennar Launches Buyer-Assistance Program At Most New Jersey Communities. “Lennar [introduced] a new buyer-assistance program that helps prospective purchasers of a Lennar home sell their present residence. Applicable to most of the homebuilder's portfolio of all-age and active-adult communities located throughout the state, the new plan enables Lennar's customers to offer financial incentives to buyers [of the home they’re trying to sell]… Don Bompensa, president of the company's New Jersey Division: "On more than one occasion, we have experienced a Lennar buyer unexpectedly unable to close on the day of the closing because the mortgage company their buyer used was out of business or the program their buyer qualified for was no longer available.” (APP.com, Apr. 11th)

Lenders Give Kimball Hill Another Month. “Lenders for Kimball Hill granted the beleaguered home builder another extension on its debt this afternoon. The previous waiver, secured on March 14, expired today (April 10). The company will now have until May 9 to work with its lender group to reposition the company to avoid a full-blown liquidity crisis that could land the company in bankruptcy.” (Big Builder Online, Apr. 11th)

Fitch: Homebuilders Aren’t Out of the Woods. “Fitch Ratings said Friday that it expects the housing contraction to last through 2008 and into 2009, contrasting with expectations of some industry groups — most notably the National Association of Realtors — that expect the back half of this year to represent a rebound in key U.S. housing markets… Fitch said it is expecting very weak operating and financial performance in the upcoming Q1’08 earnings season, and noted that credit metrics continued to decline during Q1 among key home builders. Fitch: “Tangible net worth covenants have been and will be challenged.” (Housing Wire, Apr. 11th)

Group Tells Investors To Oppose 3 Ryland Directors. “A group representing union pension funds urged investors of home builder Ryland Group Inc (RYL) on Thursday not to vote for three board members up for reelection, citing repeated failure to link executive compensation to performance. CtW Investment Group, which works with unions that own about 100,000 shares of Ryland, urged investors to withhold their votes from Compensation Committee members William Jews, Norman Metcalfe and Charlotte St. Martin at the company's annual meeting on April 23.” (Reuters, Apr. 10th)

Spectacular Model Home Grand Openings at Two Toll Brothers Communities. “New York: Toll Brothers (TOL) grand opens three decorated models at two of its very successful area communities, Van Wyck Mews in Fishkill and The Hills at LaGrange in Poughkeepsie. Van Wyck Mews features 337 condominium homes ranging from 1,200-1,400-sf. With prices starting in the upper $200,000s.” (Press Release, Apr. 10th)

Lennar to Elect Entire Board Annually. “Lennar Corp. has changed its board structure to elect its entire board of directors each year, rather than every three… Unlike other large home building companies, Lennar's board of directors actually brought up the issue itself, saying that the three-year terms "discourage takeovers and thus detract from shareholder value." Other companies, including Standard Pacific and Pulte Homes, are opposing shareholder pushes to "declassify" their board elections from staggered three-year terms to voting on every seat every year on the grounds that one-year terms make it easier for their companies to be taken over.” (Big Builder Online, Apr. 10th)

Deutsche Bank: Local Home Resale Analysis Shows How National This Downturn Is. Deutsche Bank’s Local Home Resale Analysis: "At this juncture, the chief risk for homebuilders is a weakening broader economy.” The firm is updating their price targets across the industry to incorporate earlier recovery of deferred taxes and a decrease in 5-year default rates as ascribed by the CDS market. DB raised their price target on Meritage Homes from $13 to $17, which is still below the current market price of $20.74. The raised their price target on Ryland Group Inc. from $32 to $37 ($33.94 current price). Hovnanian Enterprises price target was raised from $7 to $9 ($11.27 current price).” (Street Insider, Apr. 10th)

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Comments

[MikeW]

Insider buying doesn't portend better times, it simply means builder insiders are confident their bill is gonna pass in Washington, and they're signing up to get a bigger share of the free money from the Government. They've already laid off the workers they'd need to grow their businesses.

[H2O]

Misstatement – Delusional Lying – Know the Diff

Well we can see Obama has taught us a good lesion in reality.

Obama made a misstatement – Clinton made a delusional Lie.

Now Americans can see the diff between a simple misstatment – and what
Is a delusional lie – The Clintons like to make.

So lets simply ask – What did the Clintons do when they had a chance – To keep good
American jobs in America ?????

OHHHHHHHHHHHH wait they were into manifesdos – world doms – selling out American jobs – with NAFTA-CAFTA – outsoursing to India china.

Learn the diff !!!!!!!!!!!!!!

Another bill of goods – sign your house away con – low monthly payments for 2 years – then it goes way beyond your reach – and I have just stole your house – after all theres no regs to stop me from stealing it.

Stop falling for the delusional lies – KNOW THE DIFF !!!!!!!!!!

[nyka]

Re h2o --what's a good 'LESION"?

[Kunst]

I think it's related to misstatment, manifesdos and outsoursing.

Speaking of delusional....

[jdub]

Homebuilder stocks have been and remain over valued, and there isn't a bill that can save them. A few of the massive homebuilders, who have decent fundamentals anyway, will benefit, but the relatively smaller ones are over leveraged, swimming in unsold inventory, and unprofitable. Almost all of the indicators are negative: inflation, credit, cost of materials, foreclosure rate, consumer spending, etc. I don't claim to know what the insider buying means, but I'd be more inclined to think bail out for execs related to legislation or employment contracts rather than value.

[jdub]

Does anyone remember the recent past when we saw this same headline related to Thornburg Mortgage (TMA)? Soon after they had to meet a $3B margin call, crashed and burned leaving the suckers holding the bag.