+ Watch TMHC
on My Watchlist
The large public builders revenues increased 3X-4X from 1999 to the mid 00's. While some of this was price increases and a 33% increase in construction for the industry in general, most was market share gains over traditional smaller regional builders. While there has been a tremendous rebound in home building with starts going from all time lows of ~0.5M/ year to close to 1M/ year pace currently they are still 50% below the long term average and normalized demand of ~1.5M/ year. Home builders are complicated enough to evaluate and TMHC had a convoluted recent IPO so I'm backing into this one for CAPS with an M* fair value of ~$25.00 before they pulled coverage of the home builders that I think is low because M* is afraid to credit the large builders with any kind of advantage that they clearly have over their smaller competition. They survived while most of the smaller competition didn't. They'll get financing on better terms than the smaller regional builders if the competition get's financing at all and they enjoy economies of scale and diversification that the smaller builders don't. IMO the large public builders will continue healthy growth even after the sizable gain from the normalization of the industry in general is over as they take market share from traditional smaller regional builders. This time it will be in a rational market though. TMHC is just another opportunity to take advantage of the rebound in home building that I already did very well with both in CAPS and in my real life portfolio.
Insider buying http://www.gurufocus.com/insider/TMHC
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