WCI, Boscov File for Bankruptcy as Recession Concern Escalates. “WCI Communities Inc. (WCI), the homebuilder chaired by billionaire Carl Icahn, and department-store chain Boscov's Inc. filed for bankruptcy as company defaults escalated amid concern the
ETF Update: Homebuilders on the Rise? “Jim Cramer recently made a few mildly positive comments. He noted that homebuilder stocks held the prior lows during the last sell off. Cramer (like us) believes that the recently-passed housing bill will be important in stabilizing home prices. He sees that happening in six months, but notes that the time to buy might come earlier. Cramer says Centex (CTX) [is] a guide to the entire group.” (iStock Analyst, Aug. 3rd)
Housing Bottom and Homebuilders: No Sign of Improvement. “D.R. Horton (DHI) and Pulte Homes (PHM) continue building up inventory. According to the Phoenix Business Journal, D.R. Horton started 2132 homes in the Pheonix area during H1’08, and Pulte started 1764! I think these builders are gambling that we've hit bottom… If we're not at the bottom, these builders and all those who keep adding inventory may very well be in trouble. Remember, right now, there's almost a one year inventory of homes on the market, and there's arguably little sign that the number will improve any time soon. I still have a short position in DHI, and I'm sticking to it.” (J.C. Campos in Seeking Alpha, Aug. 3rd)
Lennar Lets Buyers Strike Back At The Pumps. “Mark Metheny, division president for Lennar (LEN): Throughout August, Lennar is running a special promotion that makes its homes even more of a value for customers. "We are giving away a Smart Car with select Lennar homes in
Green Green And Lean. “One of
Beazer Division Wins Smart Car For Top Sales. “
Wachovia Initiates NVR Inc. (NVR) with an Outperform. “Wachovia initiates coverage on NVR Inc. (NVR) with an Outperform rating and a $675-$700 valuation range… NVR is trading at a 49% discount to its historical price-to-book ratio. “The… only profitable builder, we believe NVR is a low-cost home producer leveraging its novel manufacturing/distribution facilities, option-only land strategy, and greater overall local market share... NVR should continue to achieve high margins and industry-leading returns while maintaining the best balance sheet, the most consistent cash flow generation, and lowest risk profile among publicly traded homebuilders. If NVR’s key,
M/I Homes Posts Wider Q2 Loss, To Discontinue Dividend. “M/I Homes Inc (MHO) posted a wider quarterly loss, hurt by charges, and said it will discontinue the payment of cash dividends... The company posted a second-quarter net loss of $94.1 million, or $6.72/share, compared with $42.6M, or $3.05/share, a year earlier. The net loss includes $4.14/share of non-cash valuation allowance against deferred tax assets and certain pre-tax charges of $1.77/share, among others… [The] loss of $9.09/share, excluding items, that was wider than analysts' average estimate of a loss of $1.48/share. Revenue fell 38% to $141M, below analysts' estimate of $172.3M.” (Reuters
M.D.C. Loses $100.7 Million in 2nd QTR. “M.D.C. Holdings’ (MDC) [Q2] orders fell 51% to 959 homes, the net aggregate value of those homes fell 57% to $279,000 and the average selling price of new orders fell 12% to $290,900. The cancellation rate… was 43%. The company ended Q2 with a backlog of 1,576 homes with an estimated sales value of $522.0 million, compared with a backlog of 4,134 homes with an estimated sales value of $1.48 billion at June 30,
Standard Pacific Reports $248.2 Million 2nd-QTR Loss “Standard Pacific Corp. (SPF) reported a second-quarter loss of $248.2 million (-$3.82/share), including pretax impairment charges of $149.2 million, a non-cash charge of $130.9M related to deferred tax assets and a $9.1M charge related to the early retirement of debt. The loss was nearly three times the -$1.26/share expected by analysts. The company's debt-to-capitalization ratio increased to 61.9% from 55.9% at the end of Q2’07. It ended the quarter with $572.4M in cash on its balance sheet...The cancellation rate came in at 25%, down from 28% in Q2’07 but up marginally from 24% in Q1.” (Big Builder Online, July 31st)
Toll Brothers CEO Sets Up Plan To Sell Shares--Should You Worry About Other Homebuilders' Insiders Selling Shares? “Last Tuesday, Toll Brothers (TOL) CEO Bob Toll set up a plan to sell 3 million shares of Toll's stock. Insiders selling at these homebuilders is very important to watch because the insiders' sales have proved to have great timing as the stocks have fallen in like kind in the upcoming months… Homebuilders stocks have recently gained back some of their losses, thus at these higher prices, I wouldn't be surprised to see more execs set-up 10b5-1 stock selling plans. Homebuilders I would pay attention to include: Lennar, Pulte, Centex and KB Home (KBH).” (Street Insider, July 30th)
Ryan Homes takes over Seapine Estates in EHT. “
D.R. Horton Concerns Continue. “Year-to-date, D.R. Horton, Inc. has been successful in generating cash flow, lowering land lots owned and optioned and cutting the number of homes in inventory. Also, the company announced that it would cut the quarterly dividend by half to $0.075 per share in an effort to preserve $94.5 million in annual capital. For the remainder of FY08, we expect gross margin pressure to continue from weaker average selling prices and increased incentive use. Our target price is $11.50… Unfortunately, inventory reduction from lower starts is unlikely to bring back double-digit volume growth. A high level of cancellation rates is another cause of concern.” (Zacks.com, July 30th)
Lennar’s Lawsuits. “Two years [ago] Lennar Corp. reported that asbestos dust had neither been monitored nor controlled during major grading and earthmoving operations on its Parcel A construction site on Hunters Point Shipyard... On June
Lennar sells take in Richmond condos.
Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.
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