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John Gilluly

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  • Trading The Ranges In M.D.C. Holdings And Tri-Pointe Homes [View article]
    MDC hit $28.07 this morning (2/20/2014 - day before Existing Home Sales report), near the very bottom of its range. Stock closed in the afternoon at $28.75, up 2.5% from its lows.
    Feb 20 04:06 PM | Likes Like |Link to Comment
  • Housing Starts And Building Permits Miss By A Mile [View article]
    Bespoke's exegesis is interesting. If I were to ask you, "Do you live in the world?", Of course, you would say yes. And then if I asked you how the recent poverty statistics in St. Louis were affecting you, you might say, "Huh?"

    Because what really matters is WHERE in the world you live; not just that you are a global citizen. And these housing stats are like that - anonymous global citizens, until you boil them down to the axiom that drives real estate, "Location ...location ...location."

    Home builders build what you and I call homes, and what the data creators call "Privately-owned Housing Starts authorized by building permits - 1 unit structures". A person can go the the Federal Reserve of St. Louis data site (FRED) and type in the search box "Housing units authorized by building permit" and click through literally hundreds of metro areas in the U.S. to see how things are going. By my perspective, January was a zag (down) month and February and/or March are just as likely to be a "zig" (up) month.

    So let's do a little re-interpretation of "Missed by a mile". The Midwest had an arctic vortex for most of December and January, and recorded temperatures below zero that were unsafe for people working outside. Thus housing starts in the midwest were 50,000 to a 100,000 below what they would have been under a normal "just freezing" Midwest winter. How cold was it? 40 to 50 degrees below freezing. Real cold. So cold, in fact, that the 50,000 annualized starts was the lowest EVER recorded for the Midwest.

    Add the 50,000 - 75,000 Midwest starts that were frozen out of the stats, and you have 888,000 + [50,000 - 75,000] = [938,000 - 963,000] starts, a small miss below the expected 965,000. Further, the building permits for the midwest came in at 151,000 vs. 139,000 for December, clearly a ramp-up completely belying the starts number.

    You can notice from the charts above, that starts and permits zig-zag a lot. Up one month, down the next: up down up down etc. It's the overall trend you want to look for. And except for the Midwest's one-month weirdness, the trend is up. The only areas that are down on a month over month basis is the very high-cost west (where Coastal CA dominates the stats) and the South, that was also affected by freezing temperatures.

    So what caused the drop? Freezing temperatures in 2 locales and over-priced homes in the west. Other than that, a "normal" report skewed by one-off events.
    Feb 20 06:28 AM | 1 Like Like |Link to Comment
  • Income Investing: Back In 2014? [View article]

    Here is my question. I own NLY ( I wouldn't mind owning more. I also re-invest the dividends. After each ex-dividend date I make 30 cents a share on 2,000 NLY (currently).

    Today (2/19/2014) the April 19, 2014 NLY $12.00 puts are $1.23 bid/$1.40 ask.

    What is the adaptation of your strategy to my intention (acquire more shares, earn more dividends, and lower my cost-basis)?

    For example, say I sell 2 put contracts at $1.23: if it closes below $12 I will need to buy the 200 shares, but my cost basis is $12 minus $1.23, or $10.77 (long-term capital gain cost-basis), yes?

    What if NLY closes above $12 on April 19? Do I get to keep the 2 x $1.23 ($246, taxed as income) and the contract dissolves worthless?

    In conclusion: If the stock rises above the strike price, you make income; and if it goes down, you get cheap shares. (?)

    That seems like a risk-less proposition for someone who wants to accumulate dividend-yielding shares in a "solid" company (or so I'd like to assume) and who doesn't want to sell. The person buying my puts helps me ($) along the way, yes?

    Am I missing something here? My main concern is generating income, to be used later on for retirement.

    Also, in order to sell puts, what is the customary requirements ($) from brokerages for a person to be able to do this? It appears you buy puts that expire on a quarterly basis (every 3 months). What is the rationale behind that?
    Feb 19 10:55 AM | Likes Like |Link to Comment
  • No Mortgage For Homes [View article]
    I think you said it best, "If they want to do business with US, they know how to find US."

    Precisely. Through your articles on S/A. And then sign 'em up? Another real estate author on S/A was wondering the same thing about you (the plural you, not the singular you) and wrote to me about it. First thing that popped into both our heads was the articles are a lure to acquire customers.
    Feb 13 01:13 PM | Likes Like |Link to Comment
  • No Mortgage For Homes [View article]
    Mr. Calhoun's articles - or is it Mr. Snider, or others? - ( -seem more like targeted advertising, looking for clients. Pick any one of the smiling faces on his website to manage your money.

    I am not sure if Seeking Alpha even allows this (if they knew), but trolling for customers in a public forum - and selling a product - Alhambra Partners - is definitely not "just" journalism.
    Feb 13 03:04 AM | 1 Like Like |Link to Comment
  • January Jobs Report Positives: Residential Construction Momentum And The Participation Rate [View article]
    The nominal number of new construction-related jobs in January, 2014 was almost double that of January, 2013 - in what was one of the coldest Januaries on record. There was also a pick-up in manufacturing jobs.
    Feb 11 02:04 AM | Likes Like |Link to Comment
  • There Go The Tailwinds [View article]
    In the latest BLS construction employment figures for January, 2014, hiring in that sector increased 100% over 2013: to 48K from 24k (approximately).

    For 2/3 of the United States that increase was for what's considered an "outside job" in one of the coldest Januaries on record.

    Manufacturing payroll employment also improved over January, 2013
    Feb 10 02:25 AM | Likes Like |Link to Comment
  • Is It Safe To Return To REITs? [View article]
    Galicianova - that REM looks great. Hasn't cut or reduced its 15% dividend during the recent 2013 downturn; is diversified, and is composed of some great companies.
    Feb 10 02:12 AM | Likes Like |Link to Comment
  • The Real Estate Slide - It's Just The Weather [View article]
    That's because there's no supply. Do a For Sale check on Zillow.
    Feb 9 11:22 PM | 2 Likes Like |Link to Comment
  • Is It Safe To Return To REITs? [View article]
    Galicianova - NLY, WMC, HTA, AGNC. Maybe other posters could list more names.
    Feb 9 03:20 AM | Likes Like |Link to Comment
  • Is It Safe To Return To REITs? [View article]
    Just saw this piece on S/A "American Capital Agency: Conference Call Turned Circus Act" ( In January, 2014, it's been cheaper for AGNC to buy other MREITS at a 20% discount than to buy the underlying MBS assets for their own portfolio.

    This means the 2013 market sell-off in the names is offering investors the same trade-off. If that 20% gap is closed and NLY trades up to its book value of $12.83, leveraged investors from early January will make 60% on the stock and another 25% on the dividends. That is good. Real good. This only reinforces my thesis that this is a once-in-a-blue-moon opportunity for savers and retirees to do something good for themselves, and why there has been such concentrated insider buying in the names.
    Feb 8 02:55 AM | 1 Like Like |Link to Comment
  • New Home Construction Ramping In The Chicago Metro Area - 2014 [View article]
    Investors may not sell them. Maybe they will rent them. In a growing population, you have to live somewhere. Where I live, I could rent my home (through a property management company), and net a $1,000/mo above all costs. A friend of mine who bought homes in the Sacramento area in 2011-12, makes 20% annually from those leases. The demand for housing where we live (SF Bay Area) remains constant - whether it be purchase or rent - because of the land constraint and housing permits per employment..
    Feb 8 02:17 AM | Likes Like |Link to Comment
  • New Home Construction Ramping In The Chicago Metro Area - 2014 [View article]
    "By the time it looks good, you're too late." Helen Meisler, technical analyst,
    Feb 6 03:24 PM | 1 Like Like |Link to Comment
  • Is It Safe To Return To REITs? [View article]
    Rose, for many of us, a bad experience was the beginning we needed to manage our own affairs. What often passes for financial advice from these "advisers" is just salesmanship with a small cut off every mutual fund deposit or IRA deposit from you - for them - forever. Doesn't even matter if the fund makes money (for you). It's the original and recurring sales fees and commissions that matter to them. Google - "The Retirement Gamble" from FRONTLINE and PBS.
    Feb 5 02:53 AM | Likes Like |Link to Comment
  • Is It Safe To Return To REITs? [View article]
    I suppose buying the banks the first week of March in 2009 was a success. But I was unprepared for the financial crisis before it happened, and didn't see it coming. I was nauseated all that summer (2008). That should have told me something.

    My success was buying some amazing stocks in March of 2009, and my failure was in not sticking with them. Ford for a buck, BAC for $2-$5, GE at $7, KLIC for a $1. I was so scared of losing my winnings at the end of that year that I bought a house with the money.

    The home builders gave me a second chance in 2012, and I guess that is where I found a niche market that I could understand; one that involved real things bought by real people (very different from tech with its allure, vaporware, and software dreams) , which led me to studying interest rates in the summer of 2013 (I had to know why I was getting clobbered).

    Safe to say, an understanding of interest rates is the biggest of big deals. The global financial universe seems to hang on the TNX. I never knew that before, I know that now. The cost of credit is what makes capitalism go. To my mind, the study of U.S. interest rates is both an aesthetic thing and a technical thing. Historical periods of high interest rates have a particular sociological character, as do low-interest rate environments.

    I think the Great Recession could end up being the dominant financial memory for the next two decades. People can't "get over it" because it affected them so deeply. Even after one of the greatest bull markets in memory (2009-13), the public is still very under-invested because of the persistence of this memory.

    In my articles on the housing sector, 75% of the comments could be characterized as negative, some even cynically dismissive. Meanwhile, I had a 600% return on the home builders in 2012-13. There was one real estate agent from Phoenix back then who wrote positive comments. He had bought a bunch of houses in 2011 and Pulte stock, and he sold houses in Phoenix too. He kept trying to tell people how good the Phoenix market was. They wouldn't believe him.

    Now I am into the REITS. The insider buying in the REITS is indisuputable. Union Trade Assoc's comment below about HTA is accurate. Those guys were buying their own stock throughout 2013. They must feel good about something there, yes?

    Another long term play I would look at is NSM - Nationstar Mortgage. They service loans. Yes, the re-fi market has dried up. But what about the purchase market? There has been a large increase in housing starts slated for 2014. If rates stay low and new home sales pick up, NSM should start showing a profit (again). It's down 50% in the last 90 days, and they are the best of the best at what they do. BAC sold them their portfolio of servicing rights last year on billions in mortgages.
    Feb 4 02:47 PM | 2 Likes Like |Link to Comment