Comments on: Home Builders Close to Bottom; Top Plays NVR and Toll Bros (TOL)

By: STEVE PARLAK

STEVE PARLAK — Thu, 20 Dec 2007 05:01:54 +0000

It is any fools game but I certainly could not find much value
in any of the home builders. They are going to see some very rough
times in the next five years, yes five years. The Toll insiders cashed
in about 150 million this year alone. You think he’s worried. The
poor stock holder is siting there holding an empty bag. The investor
buys 1000 sh at 20. Holds the stock for 2 years,and the stock goes
to 26. Big deal what is he going to buy with his earnings. Certainly
not one of Toll’s 500K houses. I see his earnings turning negative
through next year and into 2009. That said, I don’t see any reason
to think the stock is a buy her at 20, or any time soon. Give me some stock for free and I’ll show you how fast I cash it out. Every-
body made money in the 90′s, but today is different breed. Real
wages is what this country needs. You have one person making
100 million and another person making 40K. The first guy say’s
everything is great and the other guy is in foreclosure. WHY?
I’ve lived in Las Vegas 35 years, and I’ve never seen the likes
of the last four years. I bought my first house in 1975 for 30K.
32 years later that same house was selling for 300K. Strip dealers
and waitress’s were making 30 to 50k. There not making much
more than that today. You do the math. How much more of
inflation can we take. I see this like a Monopoly Game. We all
start out equally and then eventually some ends up with all the
money. Know they want the Goverment to bail the stock market
out and fund the mortgage companies so home owners won’t
loose their home. American’s have huge consumptions, and
everyone should live within their means. Buy what you can afford.
I love Robert Toll’s comment! 40 years in the home building business
and I’ve never seen a more difficult time than what we are going
thru now. Difficult for who, he just cashed out 100 million

By: Tate Dwinnell

Tate Dwinnell — Tue, 11 Dec 2007 20:26:53 +0000

Mike, the Dow cleared 13700 but notice it was not a big accumulation day but rather another day of diminishing buy volume as the market priced in a 25 bp cut. It set up a perfect "sell on the news" situation today. To answer your question no I’m not yet in the bullish camp

By: mike

mike — Mon, 10 Dec 2007 21:29:26 +0000

Cleared 13700 today so are you back in the bull camp at least until end of the year?

Perhaps market may attempt new highs before new year. But starting 2008 guessing we will retrace again hard…

By: Tate Dwinnell

Tate Dwinnell — Sun, 09 Dec 2007 18:55:19 +0000

Chris, great piece as usual and thanks for providing the link here. I completely agree that the builders could meander down at the bottom for quite awhile

David- I don’t care much about the macro econs because it’s a lagging indicator. The home builder stocks will have bottomed long before their fundamentals improve. I don’t disagree this is probably a suckers rally.. after all this is the first significant rally in quite awhile. There may be a few false starts before the bottom is in place.

I’m not a bottom fisher myself and can’t recommend this style of investing but it’s certainly worth discussing the components of a bottom and the companies that may lead the way out of the basement. NVR is certainly in a unique position and the CEO should be congratulated (at least up to this point) for how he’s managed NVR.

By: David Edmundson

David Edmundson — Sun, 09 Dec 2007 01:42:24 +0000

This looks like a sucker’s rally to me. Your analysis completely ignores the macro economic picture which will take another year or two or more to play out. There will likely be another mini-rally or two or three on the way to the ultimate bottom.

By: Chris

Chris — Sat, 08 Dec 2007 17:00:12 +0000

Tate,
I agree about NVR being the best opportunity in this group. I wrote a very similiar article back in August. I worked for one of the top five builders for several years and would like to think I understand what is going on (but I probably don’t).

A true bottom may still be a while off. They may travel along the bottom for a year or two.

If interested:
http://www.chrisperruna.com/2007/08/24/the-best-home-builder-stock/

By: Mark Trader in Training

Mark Trader in Training — Sat, 08 Dec 2007 03:29:50 +0000

Interesting perspective, I will be staying tuned to future articles. Time will only tell if we have reached the true bottom. As they say, you can only tell a trend was a trend when it is over.