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fransgeraedts (99.46)




August 26, 2010 – Comments (14) | RELATED TICKERS: LEN , TOL , SPF.DL

Attention! grin... All hands on deck!

I just noticed that Floridabuilder has turned his last builderstocks from red to green. As far as i can see he has no longer any builder redthumbed.

As he is our go to go guy when it comes to the developments in that sector i think that that is highly significant.

Any suggestions on what it means?


14 Comments – Post Your Own

#1) On August 26, 2010 at 12:33 AM, Momentum21 (97.06) wrote:

the bottom is in...or THE END IS NEAR!!!!!>>>>grin... : )

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#2) On August 26, 2010 at 1:24 AM, Option1307 (30.63) wrote:

Where have you been fransgeraedts?!? jk:)

FB basically stated his thoughts here , here and here.

Hope that helps, enjoy your evening (or whatever time it is wherever you live!).

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#3) On August 26, 2010 at 1:36 AM, alstry (< 20) wrote:

FB must go green in housing is his dream about 2011 will be a nightmare as millions of Americans are about to lose their jobs.....

Perdue Grocery in Charleston 

CVS Mail Order Pharmacy in Birmingham - 400 Jobs Lost

Hillside Pharmacy in Manhattan

Duro Bag to Close Hudson Plant - 63 Jobs Lost

American Eagle Outfitters to close 50 - 100 Stores

Milwaukee's Historic Turner Restaurant

Superfresh in Dulaney Plaza in Towson MD

New Leaf Center in San Francisco CA

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#4) On August 26, 2010 at 3:30 AM, fransgeraedts (99.46) wrote:

Dear option,


thank you! I was an avid reader of his blogs but had missed that he under the chimpcontest flag ..had continued.

So to wrap up what he said :

Floridab predicted the summer slump in new housing;

he says that the public builders are profiting from the demise of the private builders; that their costs are shrinking rapidly and that they therefore can build at a profit at much lower prices; that they have been able to defer balance sheet problems to the future.

he no longer expect any of them to go under.

he suggested for the long haul to accumulate the three M's slowly. MDC,MTH,MHO of breed.

for a trade he suggested buying SPF, HOV, BZH after a market correction and under or near their 52 weeks lows.

He in no way suggests that housing has turned the corner. He says to watch the sales of new (not existing) houses. 400.000 is the number that tells us we are still in deep trouble; if we reach 800.000 the builders would be making serious money; if we reach 1,2 million housing would once again be positive for the economy as a whole.

So i guess his actions on 8/17 and8/24 mean that he has pulled the trigger on the trade portion of his the form of SPF, BZH and LEN.



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#5) On August 26, 2010 at 7:44 AM, alstry (< 20) wrote:

400,000?  Deep Trouble?

The number just came in at 276K....THE LOWEST EVER!

New-home sales sink to lowest level on record


As I said....No jobs, No Income....No any price....

Last year it was a slump......This year it is a collapse.....



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#6) On August 26, 2010 at 8:12 AM, fransgeraedts (99.46) wrote:

Dear alstry,

i am just paraphrasing floridab.

And if you follow my posts you know that i think the chances for a double dip have risen.


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#7) On August 26, 2010 at 8:39 AM, alstry (< 20) wrote:

double dip?

my friend......we dipped a long time ago.......the only thing holding this baby up is government borrowing massively.....

and despite this, jobs are evaporating quickly........


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#8) On August 26, 2010 at 9:02 AM, d1david (28.42) wrote:

thanks for the update

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#9) On August 26, 2010 at 10:33 AM, Option1307 (30.63) wrote:

So to wrap up what he said

Seems like you got everything he has said, and I have to agree with him that now, or in the near future, may be a decent time to start slowly accumulating shares of home builders. MDC is probably my favorite as it has tons of cash, excellent land positions, and offers a large dividend (~4%) while you wait a few years for things to turn around etc. In fact I picked up a few shares a couple of days bac.

Best of luck!

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#10) On August 26, 2010 at 12:33 PM, TCWeaver (98.89) wrote:

Love FB insights but dont be too quick. I say march before we see any growth in building stocks. But a greeen thumb wont hurt too bad because these stocks will be flat.

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#11) On August 26, 2010 at 6:40 PM, floridabuilder2 (97.55) wrote:

nice summation frans....

I have no red thumb builders, however, I have two builders HOV and AVTR that I refuse to green thumb.

I knew we would have a real ugly negative print this Summer and I got it in July.  What people don't realize is the worse the number the better it is for the well capitalized public builders.  Any nails in coffin of private builders have been added 10 fold.

There still are tons of foreclosures to come and housing still sucks.  However, builder stocks today are the equivalent of oil exploration stocks in the late 90s when I think oil traded under $20 bbl.  The absolute carnage taking place in homebuilding is driving private competion out and future input costs (land) through the floor.

I won't even buy raw land unless I get a 40% gross margin on the build out which is unheard of even in the bubble days.  Well positioned land is that cheap today if you are working hard to obtain it.

I wouldn't buy builder stocks until one feels the market has bottomed this Summer through October.  At that point a buy and 5 year hold will look like a genius call 5 years from now.  Some of the publics have unimaginable amounts of cash and they are going to be able to steal land.  When stabilization occurs almost all their competitors will be gone.

The corporate suites/suits are talking further mergers in the industry which will be bullish for these stocks.

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#12) On August 26, 2010 at 8:23 PM, MLGtrader (31.86) wrote:

I am planning on going long the builders tomorrow.  I am considering using calls to increase the leverage.  I ran some numbers on the Debt/Assets (as a proxy for leverage) and the implied volatility for the Jan 11 calls with the strike price equal to the current price (as a proxy for relative option cost) on all of the builders.  According to the numbers, KBH has the best trade-off (relatively high leverage for relatively low option premiums), followed by PHM and MDC.  I also like that KBH has such a high short interest (at 27.7%), which could add to the rally.  I did not scratch the surface of differentiating "quality" builders.  Is KBH management positioning the company well for the coming quarters?  What builder do you think will be the best positioned to post numbers that investors will like in the next couple quarters?  I would really appreciate any insight from Floridabuilder. Thanks so much!


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#13) On August 27, 2010 at 9:55 AM, floridabuilder2 (97.55) wrote:


KBH has made significant mistakes on home selling and land buying.  Take any pop you can get before future earnings come out.  KBH left a lot of money on the table burning through good assets by pushing prices well below their competition in order to gain sales velocity.  They felt that finished lot prices would come down substantially (from bankrupt builders, etc...) and that they could replace these lots easily.  However, as I have documented on Floridabuilder before I shut it down, finished lot prices doubled and KBH had to chase prices up all the while as they were burning through core assets.

This isn't my opinion this is what management is saying.  Now they are in a position with poorly located assets from old purchases and better located assets that they over paid for because of the bidding wars that took place last year through the first quarter of this year.

KBH makes a great short squeeze, but unfortunately it will take some time for them to recover from some serious strategic mistakes.  I have a heck of a lot more faith that PHM and MDC will print better earnings in the next few quarters based on what they were doing...

I will reply to your email this afternoon, got a big meeting in an hour

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#14) On August 27, 2010 at 11:45 AM, MLGtrader (31.86) wrote:

Thank you so much for the great insight!

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