Stephen Rosenman

Three Factors that Will Drive New Home Sales

clreed1252 and 58robbo:

The point of the piece is that new home sales are depressed far below anything that has been seen in most of our lifetimes. If you go back through new home sales records that have been kept (about 46 years), it is hard to find anything similar. If you take into account the growth of the U.S. population, the numbers are even more startling. Were new home sales to rise to levels seen at any time in the 1960s or 70s, the builders' revenues would be tremendous. Whether a return to more normal sales will occur because of tax credit extensions, low rates, or simply population pressures, who cares? Quite simply, they will. Short term influences may do the job quickly; if not, certainly longer term pressures will move these sales back at least to those which held firmly for the last 45 years. Currently the eleven largest publicly traded builders account for about 17% of residential building. Their share prices have been smashed. I don't think that will continue.

'Dog' Beazer Homes Outrunning the Pack

User:
They don't have to pay off all 1.5 billion. They just have to decrease it. Since June 30, they removed $255 million in bonds for a net increase in equity of $73 million. Each time they buy back high priced debt, they decrease that $1.5 billion, and, at the same time, they increase equity. The key will be an improving debt to equity ratio. It will make BZH more appetizing for banks to lend at more favorable rates. Look at what has already happened: 20% rates have declined to 13% in 6 weeks, still a high rate but a remarkable improvement. Now we have banks lending $250 million to BZH at 12%, something impossible 2 months ago. I expect the process repeats kicking rates lower.
Eventually, I expect BZH does a secondary offering at much higher stock levels and recapitalizes much the same as banks are doing now. Again, not too long ago, no one would have expected banks to be able to do that and still drive their share prices higher. Of course, the take down of debt and rebuilding of equity will buy BZH time until housing recovers. Thus, the start of the virtuous circle.

Beazer Homes: Buy the Biggest Dog and Teach It to Run

FLbuilder: You miss the point. The market right now loves this dog, fleas and all (I'm all all itchy thinking about them), and, sure, it's the worst of the worst, right. That's the point. But, it's not going bankrupt (you're wrong there). You can hop on the dog, along with the other fleas, and ride this up. Will they need to do a secondary when the stock reaches 11? Maybe, probably. And they'll buy back more debt on the cheap when they price the secondary at 10.25. Remember the key: this stock was $80, housing's coming back, BZH ain't going away. You can look at ten other sectors and see what has happened to the most awful companies, the road kill, the left-for-dead: LZB, ANN, LDSH. Once the market decides they aren't going under, up they go at a much faster pace than their peers.