$4.26
-0.13 (-2.96%)
Beazer Homes USA, Inc. (BZH)
CAPS Rating:
Designs, sells and builds single family homes in various locations within the United States. Designs homes at various price points to appeal to homebuyers across various demographic segments.
RSS Headlines
Fool UK
Recs
I know Sleazer homes well. I wouldn't bet on this company going bankrupt because they can offer massive dilution. However, their cash to debt ratio is one of the worst in the industry and similar to a private builder. Additionally, based on the number of lots they own finished, they are going to have a huge negative cashflow problem by next year. Raw lots require a significant amount of cash burn and they do not have the capability to really buy new finished lots on rolling takes. Another big issue with Sleazer is that they are in too many markets with smaller positions (overheads) vs in fewer markets with bigger footprint.
This is a red thumb to under $1 again
I was ahead of you for once. What is it going to take to get you to write another blog? You want150 rec's? I can create 8-10 dummy aliases and make you top blogger if you want, the person that holds that title probably has 11 or 12You want gmxod to eat crow in public for questioning your mth call, and then getting sucked into a 150 + point vortex?Do I need to pay $100 a year for a subscription - for your analysis I would. Still waiting for your clear divergence but I have feeling we are getting close. The 20 city case schiller home index you tell me not to worry about is near 150k. I think we are near eqilibrium just wondering how far we will overshoot. Need an update.
I agree with TDRH.. you are a very busy man, but can you spare 15 minutes and give an update blog on the builders?thx for still picking stocks here
tdrh,we are in a bottoming process right now contrary to what the ultrabears state. I've been watching asset prices overshoot to the down side between 9/08 and 3/09. At this point, asset prices have popped a little above those levels and should bounce around at the lows for a couple years. My portfolio of green and red thumbs are a mixed bag and that is because the recent rally has made the worst builders with the highest short positions scream uncle. However, the market should retrace again lower and the worst builders will fall farther than the good ones.I plan on writing another blog, but not at a market top where we are at now. Many of the biggest bears have been screaming that this rally is unfounded, but they should be screaming that they have no idea what they are doing.Capital was IMPOSSIBLE to get last year and the first 3 months of this year, but our capital raising efforts have exploded. Private Equity funds that wouldn't sniff residential real estate are now chasing us for deals. What many of the bears don't understand is that Wall Street drives markets, not macro economics or a internet bears opinion. The fact of the matter is that Wall Street is putting money to work in distressed and sees the recent past as the beginning of the bottoming process.Hmmm... GMX never responds to my comments on his blogs about how he dissed me regarding a stock call, yet he is out there trying to call a market top??? Go figure.My next blog is going to talk about divergence, but like I said I don't want to write it now when we are at a market top
d1david,I'll be giving an update when the market pulls back some.... read my comments to TDRH.In any event I am pretty happy because capital is willing to get involved in residential assets something I haven't seen for 11 months.... The economy will worsen, but I think the bears are going to be suprised that the 666 is the beginning of the bottoming phase in the market. I find that private equity investments into hard asset classes is bullish for the overall stock market. And I am seeing that over the past month. The PHM/CTX buyout was a big deal. People that matter consider that the beginning of the distressed buying process.I don't see us upticking on home building until 2012 to 2013, but from now until 2012 there are plenty of deals in the bottoming process.
"What many of the bears don't understand is that Wall Street drives markets, not macro economics or a internet bears opinion. The fact of the matter is that Wall Street is putting money to work in distressed and sees the recent past as the beginning of the bottoming process."Ulitimately the Macro economics of the consumer is the key- it is not a question of opinion- it is a time proven correlation between median income and median home price. At current prices/interest rates we are approaching what I would consider equilibrium based on median income. Mortgages are a different animal now, and they should be. Personally, I would need the market to overshoot the bottom to invest. I believe that given the current lending standards a long flat line would result from investing in this area. Even in your 2013 horizon I see on modest increases in the over all market, but then again real estate is regional, I hope yours rebound strongly. Looking forward to your divergence post. We could really use some intelligent contributions. We have seen some flashes of brilliance, and some steady quality, but nothing to the depth of your understanding in a specific area. The area also appears to be the key to any recovery path in the market.
Ifb-
just wanted to add to the positive side... there is a huge refi/purchase boom going on behind the scenes.. I am a contractor at RBS Citizens and the mortgage dept has grown literally 3 fold in the past 4 months...
good to see some bright spots in the hard assets as well
d1david.... the govt has prevented a complete collapse, between refi's and selling toxic assets piecemeal over several years the market has bottomed between sept 2008 and mar 2009..... we can always retest, unemployment can always go up and it will... but at the end of the day, the ultrabears view of total collapse isn't going to happen...
on a side note, BZH is looking to do a capital raise and probably buy their debt at a fraction of the cost on the open market.... it'll be interesting to see if they execute it... they've already showed their hand so their debt will trade higher
tdrh, when my blogging activity starts up hard then you'll know the bottom has not worsened and several years from now the trajectory will be upward.
too many people like alstry and demon live in california which is a total disaster due to their socialistic govt especially when it comes to permiting fees on building..... the rest of the country is not as bad as california except for detroit...
when I am putting money to work in this space that is in the 3rd inning of the bottoming process...... mar 2009 was the first inning
I missed this gem of a repartee ...........
Too much going on at work and possibly bit of Goodvibing also.
There's one little problem here though - most of this is a massive deferral - I agree that Wall Street drives markets - but looks like it lacks real forward thinking.
However, as James put it - if the consumer gets back and liquidity ( will flood in this case - some of which you are seeing) - then this music goes on.
However the govt/Treasury program is a good deal for the consumer if you qualify - except I see portfolio extensions to infinity - no one will jump from a 2% mortgage unless the underlying asset trumps the optionality
hey anchak,
from talking with people connected to the Fed, the goal of the Fed is to not do the PPIP but instead have a massive RTC. So what they are doing is helping the top banks raise equity and make money in normal operations. Those banks do write offs of bad assets over time, but they are building their reserve.... and then when the healthiest banks are ready, they are going to shut down the worst banks, transfer depositers and loans to the healthy banks at screaming deals and then all the dead assets will be auctioned off like RTC..... If obama would stop trying to shove all these other programs through now and focus just on the task at hand, the economy, we would all be better off.... but these huge deficits are a major wild card
The downside is that the Fed is committed to TBTF(too big to fail) so some of the worst banks will get to be even bigger and the sacrificial lambs are those banks in the provinces with the 100 plus Texas Ratios (Real Estate Owned together with non performing loans divided by Capital). How the banks make money is by buying other banks and by sticking it to their customers- both businesses and the general public. We call this a policy? The fact is that the banks are lying on their balance sheets and lying to the regulators but everyone wants the programs to work... and who knows maybe they will, but it's still a screw job on the general public and the tax payers for the benefit of whom? You suggest this will happen "when the healthiest banks are ready" - not. There's not enough money to keep all the bailouts going (FDIC, FNMA, Freddie, FHA, PBIT etc.) and no place to raise it.
Your point that the bottom of parts of the RE market's already hit I think to be true - in last month got four inquiries(unsolicited) on apts I own that inspired zero interest over last year.
there is an endless amount of money with a printing press. at the end of the day I just move the ball down the court and work with whatever rules are in place. Interestingly, a bank that we are working with to buy assets is willing to do deals at 15% down and take paper for the rest of the land. every bank is different, some banks won't negotiate at all and believe prices will bounce because they see A and B finished lot prices doubling up. However, a lot of land assets are going nowhere but down in price.