Use access key #2 to skip to page content.
$11.47 0.02 (0.17%)
7/3/2008 1:00 PM

Lennar Corp (LEN)

CAPS Rating:
*

Primarily sell single-family attached and detached homes, and to a lesser extent, condominiums, in communities targeted to first-time, move-up and active adult homebuyers.

View All Commentary (LEN)

Recs

2

Avatar StocksForCash (< 20) Submitted: 2/13/08 10:14 AM : Outperform Start Price: $19.19 LEN Score: -33.01

Okay ... so I tried a swing short on some of the homies that had popped up a few weeks ago. Most of them worked out for minor gains and a few lost. Now, with the rate cuts, Fed. stimulus, gas going down and whatever else, ... changed my thinking that now is the time to be accumulating home builders in anticipation of the economy pulling through this and landing on its feet over the coming 1 to 3 years. Granted, we might bounce through a recession but longer term, these should perform okay to great. Also, with the whole sector in a trough, good time for some consolidation (I got luck on QMAR and YHOO being picked up in my few short weeks playing CAPS). I wanted to put this whole shpeel on the blog but I'm at work and can't be blogging ....

Report this Post Replies: 1 | Reply

Avatar strutzma (97.80) Submitted: 4/26/08 10:53 AM

Recs: 2 | Rec This

Lennar, Ryland, Richmond American, Centex, and the other "big-box" builders are, unfortunately, going to struggle for a number of years, much like the early 90s. The problem is less one of sub-prime and more of diminished demand. Many people who were going to buy homes over, for example, the next 10 years, jumped on the cheap-money wagon of '03-06, instead of waiting. Those who would have been future buyers, in this case, all bought at once during the time of extremely low interest rates (cheap money). Those buyers are gone, and with them the "average" rate of home buying. I'm not saying that the builders won't come up from these levels, but I am saying that they'll never see the cash flow that they did during those boom years. A regression to the mean, is what will occur, but to get back to that "average" after a boom, is going to take a number of years of "bust"...not a $600 check, or low fed rates, because, as you can see...fed rates at 2.5% are not creating mortgage rates lower than, around, 6%. (The banks need to make up all their losses with the spread on the fed rate and their lending rates). Personally, I'd wait to accumulate what home builders remain until AFTER the largest number of loan-resets (the Alt-A loans), which won't take place until around 2011. Best of luck to you.

Report this Post Reply

Featured Broker Partners