S&P Misleading Investors????
SPF recently disclosed it only had $293 million of cash left. It has over $750 million of debt repayments, interest payments, land take down requirements, and JV remargin liability. SPF is liquidating assets rapidly and its very possible that the current market value of its assets does not equal its outstanding debt. It is currently losing hundreds of millions of dollars and the outlook is deteriorating.
It just unexpectedly replaced its CEO and appointed a new one with NO homebuilding experience. The recently released CEO and the current CFO are being sued in a class action suit alleging providing misleading guidance. The business is currently cash flow negative and it has the second largest exposure to JV liability of any publicly traded homebuilider. Ironicly, the new CEO's name is JV Peterson.
With only $293 million of cash, rapidly dwindling assets, billions in debt, HUGE expenses ahead, and losing millions every week, S&P states the following:
3/24/2008 S&P MAINTAINS HOLD OPINION ON SHARES OF STANDARD PACIFIC (SPF 4.93***): With SPF getting an extension of a waiver of non-compliance with its credit facility, lowered from $900M to $700M, and holding$293M in cash on hand at Mar. 21, we believe it has a betterchance of surviving the severe housing downturn. SPF also appointed a new CEO from its director ranks last week. We believe SPF's high lot inventories in Cal. will become attractive when the housing market turns around. Applying aprice-to-book slightly below 0.5X to a forward book value of $14.75, in line with small builders, we are maintaining our 12-month target price at $7. /K. Leon-CPA
'Better chance of surviving the housing downturn'???? SPF has violated its covenants 4X and is begging for a 5th waiver. Who is this guy trying to deceive??? Only $293 million in cash and hundreds of millions more in spend obligations about to be shoved down its throat.....
"We believe SPF's high lot inventories in Cal. will become attractive when the housing market turns around"????????????????????? WTF? CA is one of the most challenged markets in the country in terms of foreclosures and price declines. S&P's own experts don't expect a turnaround for a long time. SPF would be lucky to get $0.15 cents on the dollar for its CA land if PHM's recent Sacramento land sale was any indication of current value.
"12 month price target of $7"? You gotta be kidding.......is that before or after bankruptcy which some are speculating could be very very soon due to recent JV deterioration?
This anlayst should be called to task immediately for such a negligent/misleading report. Who analyzes the analysts? Does SPF pay S&P for the reports? Is there a conflict of interest? Why would an analyst write such a report that seems so contrary to open and obvious evidence?
Is S&P's work on SPF reflective of the quality of its overall analysis?
See Demon, I spread out the ranting beyond that housing honey Ivy Zellicous Zellman.