Alstry Saves FloridaBuilder??? Bad Bad Analysts!!!!!
May 23, 2008
– Comments (8)
As many of you know SPF has been my whipping boy of homebuilder stocks. The reason is that I believe its management has been the most negligent of all public homebuilders and potentially flat out misled shareholders about the current business conditions and outlook.
I take lying by any management of a publicly traded company to its shareholders very seriously as that management has a legal duty to provide fair and accurate representations to the owners of the company.
One of the key areas of potential deception in my opinion is the value SPF keeps on its books for land. In my opinion, based on my work reviewing only publicly available information, there is no other public homebuilder that relatively overstates the current value of its reported land holdings as much as SPF. Most of SPF's land is in CA and FL and very very leveraged.....Yipeeeee!!!!!!
By doing that it gives the casual observer the impression that SPF has more value in its assets than may actually exist....including our buddy FloridaBuilder. Not only that the analysts are promoting this potential sham by presenting to our boy and others stats that can lead to very very misleading results. You know what they say, there are lies, big lies and statistics.....and believe you me....I know stats.
A key issue that an investor needs to know is how much impairments has a homebuilder taken on its CURRENT LAND POSITIONS. The reason is that many HBs recently purchased land at ridiculous prices and values have crashed by as much as 80%. If the builder is representing the land at the purchase price it can lead to a very misleading perspective for its owner and prospective investor. Even our buddy FB seems to have been hoodwinked......and nobody screws with Alstry's buddies even if he is a competitor.
FloridaBuilder made this post:
"SPF has written of 58% of current equity which is the highest of the 11 builders still being tracked by analysts. I like that in combination with trading at 0.19 of book."
FB got that data from a Deutche Bank Analyst. The problem is that statistic has potentially no relevance how much SPF has impaired on its Current Equity. It only address how much impairments SPF took on land in the past and likely sold already and removed off the books and divided that by its current reported value.
So for a company who is highly leveraged like SPF, if management was actually honest and impaired its land to current values, it is very possible that SPF's book value would be NEGATIVE.....that would make .19 book seem very very expensive.
Let me show you for illustrative purposes only:
SPF represents land is worth $3 Billion.
SPF has $2 Billion of Debt.
Bookvalue(excluding everything else) would be $1 Billion.
But if the land was really worth only $1 Billion, than book value would be NEGATIVE $1 Billion. A BIG DIFFERENCE AS YOU CAN SEE and FB's .19 of book would not look so cheap.
But DB uses the statistic past impairments as a percentage of current land. That is like somebody bragging about his or her vitality in marriage and using total number of times they have slept with people in the past as a percentage of encounters with his or her current spouse. Depending on the relationship and individual, it may have lots, little, or no significance..... if you know whattta I mean.
I really get pissed when FB gets hoodwinked by a Wall Street Analyst presenting goofy statistics. I am happy that it improves my chances of beating him in our race.....its not often that the 1000 to 1 shot wins but in all fairness he still has the lead......but I am getting much closer.
I hate to see FB publicly humiliated. He just green thumbed SPF. More than that I hate to see management mislead shareholders and extract millions in bonuses and severence packages just before the ship sinks and shareholders and creditors are left holding the bag.
The outlook for all HBs is difficult and FB provides one of the best perspectives on the web for this issue. CAPs is very lucky to have him as I have learned a lot and clearly many of you as well.
The key question now is what is the fair value of SPF's current land holdings? Plain and simple. Do you tink man SPF's management will ever tell us????? Has anyone seen the stat of what percentage of SPF current land holdings have been impaired and to what extent of current reported value?
If you have I am all ears..............
SPF's business woes are a seperate issue and the judments of managements should be reviewed fairly based on the facts in the context of a very difficult business climate. My beef has nothing to do with what business decisions were and were not made by management. Managing a multi-billion dollar company is very difficult. Few can do it effectively. That is a whole seperate issue.
My concern deals with honesty and character. Without it, all the data we CAPs players rely on is meaningless. Does anyone think I am asking too much in only requesting that the management and boards of publicly traded companies be honest with their owners and prospective investors.....heck we pay'em enough don't ya tink(my attempt at jamaican mon). Moreover, ain't dat da law?
And the race goes on...SPF...WCI.....SPF..............WCI with the lead.
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