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  • Hovnanian (HOV +10.5%) jumps after announcing a land banking arrangement worth up to $125M with Blackstone's (BX) GSO Capital arm. GSO will buy land parcels from Hovnanian, and option finished lots back to the company. In addition, GSO has agreed to exchange $15M worth of Hovnanian senior notes for 3.86M Class A shares. (PR)  [View news story]
    So let's revisit...
    Get into HOV. While the quarter NI was driven by some non-cash noise, it easily has $1/sh earning power at the current activity level, which is conservatively worth $6-$8 in the short-term.

    Get into HHC... 1st public presentation ever at JMP conference (on web site)... should trade at MASSIVE premium to book.

    Get into AVHI, too, particularly if you think you're late on HOV. AZ homebuilding, strong balance sheet, backlog ramping up and no coverage.

    QE3 is like a blowtorch for these names (in a good way).
    Sep 16 09:05 PM | Likes Like |Link to Comment
  • Hovnanian (HOV +10.5%) jumps after announcing a land banking arrangement worth up to $125M with Blackstone's (BX) GSO Capital arm. GSO will buy land parcels from Hovnanian, and option finished lots back to the company. In addition, GSO has agreed to exchange $15M worth of Hovnanian senior notes for 3.86M Class A shares. (PR)  [View news story]
    Get into HHC, as well.
    Jul 13 10:31 AM | Likes Like |Link to Comment
  • Hovnanian (HOV +10.5%) jumps after announcing a land banking arrangement worth up to $125M with Blackstone's (BX) GSO Capital arm. GSO will buy land parcels from Hovnanian, and option finished lots back to the company. In addition, GSO has agreed to exchange $15M worth of Hovnanian senior notes for 3.86M Class A shares. (PR)  [View news story]
    HOV shares are a call option on the company's survival, the company's survival is a call option on a recovery taking shape, as it should, six long years into the downturn... and all are playing out. Get in.
    Jul 13 10:30 AM | 1 Like Like |Link to Comment
  • LinkedIn Is Pricey but Growth Opportunities Abound [View article]
    What's the point of this article? Of course "Growth Opportunities Abound." Why else could LNKD complete an IPO at all, no less at 4X or 5X sales, or the 8X sales it priced at? Sorry to be over-critical, but we increasingly see analysts cite generally fun, sunny, peppy observations as being somehow relevant while avoiding the question..... do you have a view on the valuation at 17.8X sales or not?
    May 26 03:03 PM | 1 Like Like |Link to Comment
  • St. Joe: The Absurdity of the Leucadia Airport Comp [View article]
    It’s really amazing that the bears don’t “get” how much sheer value the airport adds to the land. After all, “Business Facilities” ranks Panama City #1 for Potential Economic Growth Potential for areas w/under 200,000 population. JOE even has a link to the article right on its web site:(www.businessfacilities...).

    I have an even better play than JOE, however. Just imagine how much money we can make if we go and assemble TENS OF THOUSANDS of acres around Manhattan, Kansas; Midland, Michigan; Newport News, Virginia and Knoxville, Tennessee, which rank #2-#5 in the survey, respectively. Why, I’ll bet there are plenty of uninformed farmers who’d take the money and run even if we were to offer WAY less than $60,000/acre!
    Apr 4 08:50 PM | Likes Like |Link to Comment
  • Why This Stock's Price Should Be Slashed in Half [View article]
    Fairholme strangely seems to misunderstand the most basic quality of land. Land is worth its agricultural value unless external things happen to increase demand for development. Because it’s the most basic “residual” input, land is intrinsically levered to the upside if external demand grows and levered to the downside if expected demand disappears. For example, the family that owned the 60,000 acre Irvine Ranch on the coast a short distance south of Los Angeles, saw incredible value created as LA grew to a major city over the years and created demand. How about Disney? Their theme parks have produced returns on the capital they’ve invested (inclunding the rock-bottom prices they pay for the land), while their NEIGHBORS saw land values increase over time.

    All JOE has is the land, the last and most leveraged piece of the value chain. If another Los Angeles were to grow around JOE’s land because other people want to be there, then it would prosper. That obviously won't happen. Can they "create" demand a la Disney. Under the theory that demand can be “created” there are two possibilities. First, JOE could raise massive amounts of capital to invest in development, which requires an incremental return greater than the cost thereof (which Einhorn shows is impossible). Second, JOE can try to attract others’ capital, which would, of course have an even higher cost. What does JOE have to offer someone to do this? Since it has the land and nothing else it would need to virtually give the land away for free.

    JOE is worth more or less the assets as timberland, less whatever money it wastes between now and recognition of that value.
    Mar 16 06:50 PM | 5 Likes Like |Link to Comment
  • St. Joe Co. Earnings and Revisiting Einhorn's 'Valuation' and Omission [View article]
    The bull case for JOE is absurd, totally ignoring the concept of DCF. In real estate downturns that push out demand for new product past any foreseeable time frame, land values approach zero. The land must be held until there is real demand, then infrastructure expenditures must commence and finally the land can be sold to build on. With JOE’s coastal land gone, a paltry existing population base and a decimated housing market, even the most optimistic visions must be discounted to near zero. Berkowitz’ desperation is revealed by the attempt to attract capital from Asia discussed in the WSJ (“St. Joe Looks East for Salvation”, online.wsj.com/article...) and the notion that JOE’s land will be an sight for locating technology and industrial companies in an effort led by Goldman Sachs, no less. If that plays out exactly as planned, how long with it take to negotiate complicated transactions, plan facilities, plan and construct infrastructure, etc….. all based on the notion that there is a good economic reason to do this…. predicated on competing with other States that pursue such investment…. by GIVING THE LAND AWAY!

    Contrast JOE’s predicament with HHC and it’s Summerlin, Nevada holdings, namely 7,000 acres and a future regional mall in the MOST DESIRABLE, ESTABLISHED community in a metro area with 1.8 million residents. Based on HHC’s Nevada value alone, the fact that these two companies have nearly identical $2.5 bn. market caps is laughable.

    The only thing wrong with Einhorn’s thesis is that the JOE’s absence of debt removes distress as a catalyst, allowing the market to stay irrational for a very, very, very long time while JOE's investors cling to the hope the Goldman Sachs can find greater fools in Asia to bail them out.
    Mar 15 03:08 PM | 4 Likes Like |Link to Comment
  • Pending Home Sales: Do Real Estate Statistics Mean Anything Anymore? [View article]
    This data has never meant anything for all reasons described above, except in discerning broad trends (ie the markets went up way above trend for a while,blew off in late '06 and have been down ever since). The "circularity" w/regard to resi properties distorts things more - ie, users rent office, retail, apts and investors set prices for those cash flows, however, users and investors compete, sell to each other and distort market price observations for houses.

    If this data meant anything, then Greenspan would have been correct that housing prices never decrease nationwide, and then the assumptions the rating agencies used in their models would have been correct and then citi and merrill and lehman would still be humming along and......................
    Jun 11 06:27 PM | Likes Like |Link to Comment
  • Standard Pacific: Beware This Home Builder's Massive Dilution [View article]
    Does your analysis of SPF's pro forma diluted book value take into account the fact that the equity book value will increase by the amount of any preferred or debt that is retired in the conversion? Eg, you state that the Book Equity is $435MM. Partially offsetting the per share dilution, the company's total Book Equity should increase by the face amount of the more senior securities retired through the conversion to Equity.
    Apr 23 04:15 PM | 1 Like Like |Link to Comment
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