Saj Karsan

M/I Homes: Over-Punished by the Markets

Hi Game,

I don't actually own the stock, but if you have shorted it down since 40 you have done well. How low do you expect it to go?

You're right they pumped up book value with pref shares, but I subtracted them in the article for the purpose of calculating common shares.

M/I Homes: Over-Punished by the Markets

Hi Game,

The company has substantial writedowns on its real estate to reflect the fact that they've overpaid (therefore book value is written down). If you're saying the book value is actually 35 cents on the dollar of what they're currently paying, does this mean you feel management is not following GAAP (and are therefore following fraudulent policies?) or am I not understanding you correctly?

M/I Homes: Over-Punished by the Markets

You guys are right, the company is losing money. But consider for an instant a company that has $50 of real estate, and loses $1 a share. If you only look at the earnings, you may value the company under $10 / share. But if you consider that in the long term they will realize value from liquidating the real estate, there may be value to be had in such a company.

That's the vantage point from which I'm arguing MHO...you guys are absolutely right about the earnings being poor.