User 214609

Getting Caught in the Trap? Evaluating Silverleaf Resorts (Part II)

I would add to your analysis the fact that insiders have been buying significant amounts of stock at this level and they already own 44% of the company. This would lead one to believe that they are comfortable with their liquidity situation. Also, the timeshare industry has historically been pretty resilient to economic downturns because people see them as an asset and are less likely to just give them up when times get tough.
Also buying a timeshare is more of an impulse buy than buying a house therefore it's much easier to turn around and sell their inventory. I would also point to the fact that silverleaf has a debt to equity ratio of 2:1. Most banks are at least 7:1 and in thisenvironment you have lenders with a 17:1 debt to equity ratio and higher like lehman brothers.