Hovnanian Enterprises, Inc. (HOV)

GSH1976 (99.83) Submitted: 9/08/07 2:26 PM : Start Price: $23.96 HOV Score: 59.10

My largest position by far is short HOV via stock and puts. It has been volatile (short squeezes in this stock are amazing) but I have done my research and continue to ride it out. There have not been shares available to short at my broker (IB) for over a month now so I don't even bother trying to play the wild swings. Instead I sit and wait for what I believe is inevitable - bankruptcy.

Hovnanian just reported earnings and things continue to deteriorate. I listened to their earnings call and Ara and Larry did their best to sell everybody on HOV's future prospects. Unfortunately they couldn't explain how they were going to achieve these grandiose claims and it was obvious the analysts (who tend to toss nothing but softballs at these calls) weren't buying it. During the call Ara had these great things to say:

We have gone through this before

We have senior management that can guide us through this

We are going to end up stronger after this downturn

Our company has never been in a better position

We believe the areas that were the hardest hit will be the areas that bounce back the strongest

We are very bullish on the stock price

They are completely overleveraged and if their inventory was written down to realistic values they may already be insolvent. In the meantime Ara can do his best used car salesman impression. This is the same guy that appeared on CNBC in early July 2006 to tell everybody that housing had bottomed and he was very bullish on the stock price. He was callling the bottom OVER A YEAR AGO!!! The clip of this was available for viewing at CNBC's website and I contacted them a few weeks ago to tell them to watch it prior to Ara's appearance on Squawk Box the following morning. To my surprise the next day it was gone. That is funny.

Ara has been on CNBC three times in a little over a month while no other homebuilder CEO has made even one appearance. Maybe it is just me but it seems somebody is very desperate. Ara still doesn't get it and I believe a bankruptcy is inevitable.

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