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alstry (35.46)

Alstry Saves FloridaBuilder??? Bad Bad Analysts!!!!!

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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.

 

8 Comments – Post Your Own

#1) On May 23, 2008 at 1:15 PM, alstry (35.46) wrote:

Somebody, who has an account, should call up that Deutche Bank and ask what percentage of SPF's  current assets' reported value has SPF impaired.

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#2) On May 23, 2008 at 2:31 PM, alstry (35.46) wrote:

The ship is about the pit the ham.

Vallejo, Calif. files for bankruptcy protection: report

 

SAN FRANCISCO (MarketWatch) -- The California city of Vallejo filed for bankruptcy protection in a Sacramento federal court as anticipated, The Associated Press reported Friday. The city of 117,000, which is about 30 miles northeast of San Francisco, reportedly has a budget shortfall of $16 million for its fiscal year 2008-09, which begins July 1, and has no money in reserve.

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#3) On May 23, 2008 at 5:37 PM, DemonDoug (82.62) wrote:

alstry, a wrong call on SPF isn't public humiliation.  You and him are taking data and forming opinions about it.  Personally, I'm on your side, I think SPF is about as bad a company as New Century.  If you remember, New Century was making loans up until they day they filed BK.  I have a feeling SPF will be building new spec homes until they file BK in a similar manner.  I've made a couple of really bad calls and I don't feel humliated, it's all been a learning experience.

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#4) On May 23, 2008 at 7:14 PM, alstry (35.46) wrote:

DD,

I agree completely.  I doubt many on this board have come close to making the whopping financial mistakes I have.

We all make mistakes and life goes on.

As you know, my primary concern rests with the character and integrity of management.  When we collectivel allow that to wax, the whole system is in jeopordy.

Exposing it is more important than any of us individually.  You and me included. 

I have repeatedly asked FB to give us what he perceives as the actual value of SPF's current assets......he keeps dodging the answer.

What can I say?

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#5) On May 23, 2008 at 9:25 PM, floridabuilder2 (99.27) wrote:

alstry enough..... i explained what i do for a living, caps contacted me, i told them to take the last blog post down because it was out of line... and i'm going to cool off this weekend....

just stop posting things about me on a yahoo and on this message board... did you ever think that maybe i dodge questions for a reason.... if you prodded me about any builder that is being investigated by some creditor and i knew about it i would dodge your questions, not just SPF

like i said there are two views i give... the global view on homebuilding.... and the up close view on builders that are getting in trouble... it is not ethical for me to go any further than what is in the financials publicly.......... and if a builder that is on the edge gets out of the doghouse.. then they are out of the doghouse... leave it at that and move on....  if they were teetering you'll here me chattering about it real quick in terms that i pull off the 10Q

have a nice weekend.... and no your not a nazi, but just back off on the SPF board on Yahoo... not because you owe me anything, but because I don't appreciate it

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#6) On May 24, 2008 at 12:18 AM, alstry (35.46) wrote:

Let's get something straight.....you crossed the line tonight.....and I think I know why and it is obvious other CAPs members don't.....that's OK.  Then you create this hissy fit diversion and ask to get your blog erased?

But your BS accusations against me re what I am saying about you is getting a little tiresome....I have asked you to document them and you have provided nothing.  NOTHING!!!!

Then tonight, on Memorial Day Weekend, you raise the Nazi issue as if somehow you are being persecuted in a similar fashion?  Shame on you and all your crap.

I have never personally attacked you(except the fun jabs BACK AND FORTH just as you did with DemonDoug in the past), Moreover, in almost every one of my posts, I make sure to compliment you and often try to promote your blog as an excellent source of good information on HBs.  But tonight you crossed the line and you have no fricken clue who you are dealing with...

You want some honesty and integrity.....well here it is:

You say you don't have inside information at SPF?

Here is what you said in comment #29 on January 28th, 2008:

alstry...... my company has some very high level (executive suite +) contacts at SPF...  I already know what they are going to report on their financials

I, or anybody else, doesn't need you "accuse" you of having inside information, you admitted to it you idiot.  If you havn't figured it out by now, I have been trying to protect you from your own stupidity.

So first, you have admitted to having access to inside information at your company.

Then, if that wasn't stupid enough you make this comment on April 26th, 2008 in comment #31:

alstry........ no clue on earnings, cashflow, etc...  i just know that they have a BIG problem right now and it isn't anything that you have alluded to in your countless posts... this is a totally new problem that trumps EVERYTHING.... and they are going to get stuffed because of it...

You think an SEC enforcement officer is going to believe what you said tonight that you were referring to the same thing BBO reported a few days ago about SPF shopping the company and no one showing up?  CAPS members might but that is where it likely stops.  Sure, that is the BIG problem that trumps EVERYTHING. 

Quite frankly, I don't know who you are or who you think you are.....but when you level baseless accusations or throw intentional punches, you better have a clear idea who and why you are directing them at......because they may actually be stronger than you and possibly looking out for your own interests and you too stupid to know it.

Further, please don't tell me what I can and cannot say.  I am a very strong proponent of the First Amendment and its implications.  Men and Women served and died protecting it and I don't need a defamatory weasel you telling me what to and not to say.  As I have stated, ALL of my posts are open for anyone to read, review, refute, and comment upon.  I pass no judgment on anyone and I encourage critical responses.  Open discussion only fosters better analysis as reasonable minds can lead to different conclusions on the same topic.

But you are in a class all by yourself.  In my career, I have never seen such a fool dig such a deep hole for himself and cut off the hand of the person protecting him.  That said, I will honor your request to refrain from using your name in posts on CAPs.  But from now on, you are all on your own BUDDY.

PS: your statement earlier about not giving me an appology, that is OK....I am not looking for one from you.....I only pass this advice, no hole can be dug deeper than the one you dig for yourself....I just hope you are a good climber.

By the way, I am still only $0.50 cents behind.

 

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#7) On May 24, 2008 at 11:27 PM, alstry (35.46) wrote:

Will Distressed Land Buyers Prevent BK?????

NEW YORK (Reuters) - The precipitous slide in home values and a glut of unsold properties are pushing U.S. home builders to the brink of insolvency, but a posse of unexpected saviors could help keep the companies out of bankruptcy court until home buyers return.

Hedge funds, private investors and even larger cash-flush home builders are eyeing valuable swathes of land held by troubled companies, according to bankruptcy attorneys and restructuring specialists.

As long as private firms have the cash to keep a struggling home builder running, they think they can profit when the real estate market picks up again."I don't think we'll see as many free-fall bankruptcies as in past crises, due to the presence of distress investors willing to take control, restructure and work with undervalued companies," said Corinne Ball, a partner at law firm Jones Day and co-head of the firm's New York restructuring and reorganization practice.

Restructuring specialists Alvarez & Marsal recently formed a group focused on home builders and their constituents and company directors say their focus is on helping companies find alternatives to bankruptcy. The group has received a slew of calls from hedge funds and other investors, who believe there is value in companies battered by the current housing crunch.

Troubled home builder Standard Pacific Corp (SPF.N: Quote, Profile, Research), which builds homes in Florida, California and other major metropolitan areas, may be catching the eye of hedge funds. Hedge fund Tiger Global Management LLC has taken a 3.55 million share stake in the company, making it the fifth-largest institutional shareholder, according to Reuters. The firm declined to confirm the data or comment further.

Hedge funds are finding they can offer operating cash or long-term equity financing to distressed companies."If there's a home builder who has a project that is partially built, with the infrastructure and amenities in and homes in construction ... if you can get the price low enough, a hedge fund might be interested," said Harvey Miller, a senior partner at law firm Weil, Gotshal & Manges LLP.

And some larger home builders with cash to spare can snap up land at fire sale prices, a deal that can offer a lifeline to a smaller peer.  "We haven't purchased any (distressed land) yet, but we certainly will before this cycle is over," said Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc (HOV.N: Quote, Profile, Research) at the Reuters Housing Summit in February.Still, it is risky for investors to bet on home builders or related companies.

Declines in U.S. home prices accelerated in the first quarter, falling a record 1.7 percent from the end of 2007, according the national house price index of the Office of Federal Housing Enterprise Oversight (OFHEO), which covers home purchases.As home values fall, builders are slashing plans for new developments and allowing land to lay fallow, cutting off their revenue stream.

Debt for companies, including Standard Pacific, is trading at distressed levels and banks are increasingly unwilling to lend to many home builders as the housing market weakens.A Chapter 11 bankruptcy could protect some companies from creditors, while they restructure, but with analysts saying the housing market is unlikely to regain strength soon, liquidation may be their only option.

According to Jerry Mozian, director of restructuring at consultancy Tatum LLC, "there is a constant flow of construction companies coming through. They, for the most part, are probably not going to get reorganized. They are going to sell assets."

Tousa Inc TOUSQ.PK, which builds single-family homes and condominiums in metropolitan markets including Florida, filed for Chapter 11 bankruptcy protection in January and said later it had received permission to continue selling off a backlog of homes.

But the desperate and expedient measures required by bankruptcy and liquidation can cause much more pain for a company and its stakeholders. With a cash infusion from hedge funds or private equity, the company may be able to wait out the housing slump and its investors can reap the rewards, restructuring experts say."

Distressed investors are changing the world," said Jones Day's Ball.

Just presenting the other perspective.  Hmmmmmmmmmmmmmmmmmmm.  Is Alstry missing something?????  SPF is only .19 book!!!!!  It's been green thumbed and $$$$ signed by the best.  And I have a suspension bridge in the Sahara I can sell you.

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#8) On May 24, 2008 at 11:46 PM, alstry (35.46) wrote:

Where have we heard this before?????

Buffett sees "long, deep" U.S. recession
Saturday May 24, 7:30 am ET

BERLIN (Reuters) - The United States is already in a recession and it will be longer as well as deeper than many people expect, U.S. investor Warren Buffett said in an interview published in German magazine Der Spiegel on Saturday.

He said the United States was "already in recession" and added: "Perhaps not in the sense that economists would define it" with two consecutive quarters of negative growth.

"But the people are already feeling the effects," said Buffett, the world's richest man. "It will be deeper and last longer than many think."

But he said that won't stop him from investing in selected companies and said he remained interested in well-managed German family-owned companies.

"If the world were falling apart I'd still invest in companies," he said.

Buffett also renewed his criticism of derivatives trading.

"It's not right that hundreds of thousands of jobs are being eliminated, that entire industrial sectors in the real economy are being wiped out by financial bets even though the sectors are actually in good health."

Buffett complained about the lack of effective controls.

"That's the problem," he said. "You can't steer it, you can't regulate it anymore. You can't get the genie back in the bottle."

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