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alstry (< 20)




March 10, 2008 – Comments (9)

Imagine how Ara Hovnanian feels about SPF?   SPF has about 1/3 the backlog as HOV($442 million vs. $1.3 Billion) and over $3 Billion of debt including JVs(approaching 50% more debt compared to HOV). Spec homes are about the same.

Last year HOV got rid of half their lots and didn't make a dent in debt. Assuming HOV gets rid of the other half of lots this year, at even lower margins(Ara admits he doesn't expect a recovery until the end of the year), this company will not have any lots to build on and over $2 Billion of debt.  OUCH!!!

Basically Ara has implied that HOV is going BK in 2008 extrapolating the above to its logical conclusion.

Thanks Ara.

Again, can you imagine how Ara feels about SPF with 1/3 the backlog and 50% more debt?  Do you think Ara would be happy with FloridaBuilder for ranking SPF higher than HOV?

WWAT-What would Ara think?

9 Comments – Post Your Own

#1) On March 10, 2008 at 9:49 PM, alstry (< 20) wrote:


It appears SPF only has something over $2.7 Billion of Debt including JVs with only about 1/3 of HOV's backlog.  It should be noted that SPF's assets are much more concentrated in CA and FL compared to HOV.

Although it is factually correct that SPF's debt is approaching 50% more than HOV' appears  the approach is somewhat longer than I orginally remembered.   Thank  goodness  I am not a pilot.

Thanks to Bellard, a very successful CAPS player, for pointing out this fact and reinforcing that SPF has only about 1/3 of HOVs backlog and hundreds of millions of additional debt outstanding.


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#2) On March 10, 2008 at 10:48 PM, alstry (< 20) wrote:

Bellard does it again.

His clarifying SPF's debt level revealed a new metrix to compare SPF to HOV.  Debt/Backlog

HOV's debt is about 1.8X its backlog. ($2.3B/$1.3B)

SPF debt is over 6X its backlog($2.7B/$442MM)

How does a builder with six times the debt compared to backlog come close to meeting its debt obligations in a no margin and rapidly declining business environment?  Maybe that is why SPF's executives are bonusing themselves millions of dollars in CASH, do you think they know something that they are not telling shareholders?

Thanks again to Bellard for providing a new metrix to compare HBs.  How would Ara now feel about FloridaBuilder ranking SPF higher than HOV with this perspective?

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#3) On March 10, 2008 at 10:52 PM, alstry (< 20) wrote:


SPF is in a class by itself.  A dog is a dog but a shitzu is in a class all by itself.  You can relate.

RYL, simply ridiculously overvalued for a company with less than $1 Billion in backlog and specs and almost the same with payables, accrued liabilities, SGA and buildout costs.

Once you value residual land against remaining debt, RYL might be lucky to have a FMV 1/4 its current market price.  Compared to SPF, RYL mgt are vestal virgins.

You repeatedly make the comment that you can name 100 top builders that are in worse shape.  I have probably dated 100 women uglier than your wife.... so what? 

There are only just shy of 20 public builders.  We can only bet on those builders.  In this forum, the game is simply what you get for what you pay.  Relative beauty may not be provide the best performance where it matters.  Isn't that what CAPs is all about.....performance where it matters

The fact that I know 100 ugly women really has no bearing on the gorgeous one you sleep with.....does it now?

Its a game about valuation and direction, no more no less.  Each pick is its own horse.  If you pick a horse and it wins, you get a nice payoff.  If you pick two, you can win the daily double and buy a pair of Ferragamos.  Knock down the trifecta, and wow, you can spend a weekend in Vegas.

There are thousands of stocks out there.  Some prettier than others.  But in our race, there are just two horses...yours is WCI and mine is SPF.  In the end, we are really here to help each other....or at least make each other think.  In the mean time, the horses are at the starting gate.................

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#4) On March 10, 2008 at 11:09 PM, floridabuilder2 (98.78) wrote:

alstry... boy you really dislike SPF... how come?  that and Ryland........  I can name about 100 top 200 builders that are probably in worse shape

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#5) On March 10, 2008 at 11:23 PM, bellard (97.57) wrote:


I do like your B/D(backlog to Debt) metric. But lets give SPF a little break and wait for Q1 backlog, and net debt levels. I would like to see after all HB's report Q1, all the B/D ratios - LEN, CTX, SPF, KBH, etc..

But make sure you are comparing apples to apples. If you incude SPF JV's debt - you must also include any JV backlog if there is any....Also include all JV figures for the other HB's.



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#6) On March 10, 2008 at 11:59 PM, alstry (< 20) wrote:

Bellard, your comments are fair.

However, no HB comes close to SPF in a number of metrixes. 

SPF's problem going forward is that it is rapidly running out of assets to liquidate before being forced to go back to lenders and beg for more money or liquidate to nothing.  Could you imagine how low SPF's assets would drop if they simply valued their land at market value.  CTX and PHM just dumped a fairly large improved piece of land for 16 cents on the dollar.

Puffing your company is one thing, lying to shareholders and bonusing yourself cash for your own mistakes while you fire employees is a whole different level.

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#7) On March 11, 2008 at 1:06 AM, DemonDoug (31.03) wrote:

FB, as I understand it, is going by a quarter-to-quarter assessment, and part of that is based on the cash position of the company.

Alstry, you are my hero man.  Florida, I'm with alstry - SPF, from everything I've seen, read, and heard, not just from alstry but on my own including your blogs, are really a worst in breed.

I think you need to be a bit careful alstry, all the posting on SPF is bordering on obsessiveness though.  Don't become a yahoo messageboarder on me.

I think your message is great though - you are being critical of management when you see them paying themselves huge moneys when it is obvious their company likely won't survive 2008, and the shareholders will be SOL.  It seems to me that the management of SPF is almost criminal in the way it conducts it's business.  Hell, almost all the HB's were involved in the fraud that was part of the fuel for the entire RE bubble, but SPF definitely has a special place on top of the scumbag managers.

I would like floridabuilder to answer some of these allegations more directly, but I have a feeling there is nothing to answer - you're just calling a spade a spade.

I can't wait to write another poem about you guys. :) 

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#8) On March 11, 2008 at 1:30 AM, EScroogeJr (< 20) wrote:

I have not done a detailed comparison of SPF vs. HOV, but upon a cursory glance I think I can see some value in SPF's joint ventures, making SPF's assets harder to dismiss as worthless than Hovnanian's. Maybe FB also thinks along these lines.

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#9) On March 11, 2008 at 2:39 AM, alstry (< 20) wrote:


No need to worry. Clearly FB is the Big Kahuna of CAPs HB analysts.  It is a privelege to exchange ideas.  Now it will be even more fun to watch our horses race.  With you and FB........the opportunities for profits are endless.

My posting will branch out.  SPF is simply an ugly sniping shitzu in dog eat dog world.  It is simply amazing how Wall Street lets this BS persist.

We will have a lot of fun with RYL and CTX.  Both overvalued and niether may make it until the end of the year.  One has too little backlog and too high payables putting on a path for life support, the other, well if you have to ask then I failed.

We also have BestBuy, Bellard has this one as a buy recommendation.  Bellard is a bright guy but bunch of BestBuy's sales are no money down deferred financing, somepeople call that subprime lending if you can believe that. 

The next four weeks could be some of the most interesting we have seen in a while.  The REAL deterioration in the actual economy currently unwinding  is unlike anything in history.  Where this ends up is anyone's guess.  We could all be broke.

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