Are Home Builder Managements Mentally Impaired?
RYL reported the following tonight:
Homebuilding revenues decreased 44.6 percent to $261.6 million for the second quarter of 2009
If a over 44% drop in revenue isn't bad enough.....
Loss of $1.70 per share for the quarter ended June 30, 2009
BUT WAIT, HERE COMES THE NUTTY PART:
During the second quarter of 2009, the Company issued $230.0 million of 8.4 percent senior notes due May 2017.
THE MUST NEED THE CASH FOR SOMETHING....IT IS COSTING THEM OVER $17 MILLION PER YEAR, BUT SINCE ITS CAPITALIZED, MANY WON'T SEE IT HIT THE BOTTOM LINE FOR A WHILE....SO WHAT COULD IT BE FOR?????
The Company has engaged PIMCO to invest approximately $400.0 million of its cash in short-term, highly rated securities.
ARE YOU KIDDING ME??? BORROW OVER $200 MILLION AT OVER 8% TO SIMPLY GIVE IT TO PIMCO TO INVEST AT A FRACTION OF THE RATE???
Who in their right mind would do something like that and for what purpose????
Welcome to the era of extend and pretend......