IVY ZELMAN Drinking Kool-Aid?
The babe of building analysts?
She rates SPF a "BUY?" What Kool-Aid is she drinking? Ivy became famous for that comment during ia conversation with Bob Toll.
Let's think about this for a second. SPF has $700 million dollars of JV recourse liability and about $400 of the subject to remargin payments. It ended the year with less than $250 in cash and an outstanding balance on its revolver.
Toll just confirmed for us a few days ago that JVs are a BIG problem.
Most of SPF's assets are in CA and FL. Most of the assets are owned land. SPF has those assets on the books at rich valuations that are probably no where close to current valuations. We know from recent sales that land in CA and FL practically worthless....just ask Ara Hovnanian or CTX of PHM.
SPF has almost twice as many specs as backlog. And most of the specs are UNDER CONSTRUCTION. Why wouldn't IVY question this? It has violated its revolver covenants THREE times and is now on deck to beg for forgiveness in the next few weeks.
Its management is being sued for allegedly providing false guidance while stuffing millions in bonuses in its pockets coming off a year where it lost more in 12 months than its entire history as a public company. Not only that, during its tenure, this management team increased SPF's debt by over 25X.
We could go on and on and on and on.......but just with the above, why do you think Ivy would recommend people buy the equity of this company when it is obvious the assets can't even close to paying off the billions in debt?
What flavor Kool-Aid does Ivy drink?