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alstry (< 20)

IVY ZELMAN Drinking Kool-Aid?



March 12, 2008 – Comments (3)

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?


3 Comments – Post Your Own

#1) On March 12, 2008 at 5:51 PM, alstry (< 20) wrote:

How tight will things get?

NEW YORK — The loan Americans qualify for on Monday might be out of reach on Tuesday.

Bankers and lenders in the United States are rapidly changing their requirements as home sales and prices plummet and delinquencies and defaults rise. Problems in the mortgage market are spilling into other lending markets as customers struggle to keep up with payments on other loans, such as auto and credit card payments.

"The market is reinventing itself daily," said Les Berman, owner of Beverly Hills, Calif.-based EB Financial and president of the California Association of Mortgage Brokers. "I did my first loan in 1971 and have never seen anything like this."

Tom Kelly, a spokesman for JPMorgan Chase & Co. said within the past eight months, Chase has focused on combined loan-to-value ratio (CLTV), documentation and credit scores to improve loan quality, and raised minimum requirements for each. Chase also no longer offers 100 per cent CLTV loans anywhere, with restrictions as tight as a maximum 65 per cent CLTV in Nevada because of rising delinquencies.

Just as delinquencies and defaults are rising among mortgage and home equity products, problems are mounting for auto lenders as well.

Greg McBride, a senior financial analyst at, said many auto lenders are requiring larger down payments on loans. In fact, McBride said changing credit requirements for auto loans are somewhat mirroring changes for home lending, with high credit scores and larger down payments needed to qualify for loans.

"Consumers with a risky profile qualify but for higher rates, if at all," McBride said.

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#2) On March 12, 2008 at 6:04 PM, alstry (< 20) wrote:

Berkshire Sees Greater Risk in Debt of States, Cities (Update1)

By Michael McDonald

March 12 (Bloomberg) -- The risk of guaranteeing municipal debt is increasing because the economy is slowing and some insurers may cut prices to regain lost business, said Ajit Jain, head of Berkshire Hathaway Inc.'s new bond insurer.

Fiscal stress in Vallejo, California, and Jefferson County, Alabama, may be the ``tip of the iceberg'' for municipal defaults, said Jain, who runs Warren Buffett's Berkshire Hathaway Assurance Corp. He said downgrades of some insurers hurt the industry's integrity and those firms may spark ``pricing wars'' if they regain their financial footing and seek to recoup lost business.

``While we are writing business at pricing levels that are economically attractive to us, I remain very concerned about the long-term viability of this product,'' Jain said in testimony submitted today to the House Financial Services Committee in Washington D.C.

Half of U.S. states project budget deficits for the next fiscal year as the slowing economy curbs tax collections, forcing local governments to spend savings, cut funding for programs and borrow or raise taxes, the Center on Budget and Policy Priorities, a Washington-based research group, said in January.

Vallejo, California's city council approved a fiscal emergency plan on March 4 to avoid filing for bankruptcy protection. The city of 120,000 faces ballooning labor costs and declining housing-related tax revenue that left it nearly insolvent.

Jefferson County, Alabama, was downgraded by Moody's Investors Service and Standard & Poor's, most recently on March 6, after the market for some insured floating-rate bonds collapsed last month, increasing the cost of the county's $5.4 billion sewer debt and triggering other, higher financing costs.



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#3) On March 12, 2008 at 6:46 PM, alstry (< 20) wrote:

STANDARD PACIFIC (SPF) keeps building SPECS but CA builder:

Lyon Homes to mothball 10 projectsMarch 12th, 2008 · 21 Comments · posted by Jon Lansner/O.C. Register columnist

Details from the annual report filed with the Securities and Exchange Commission by Newport Beach builder William Lyon Homes …

• In 2008, the Company expects to temporarily suspend all development, sales and marketing activities at ten of its actively-selling projects which are in the early stages of development. Management of the Company has concluded that this strategy is necessary under the prevailing market conditions and would allow the Company to market the properties at some future time when market conditions may have improved. … At December 31, 2007, the Company marketed its homes through 60 sales locations in both its wholly-owned projects and projects being developed in consolidated joint ventures.

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