Simple: Shorting otherwise would be far too EASY. It is so painfully obvious that this stock is not even worth $5 given the collapsing housing market, which will continue to collapse through at least 2010, despite what all the "experts" may be telling you. Not only is the company collapsing, its market is collapsing, but the CURRENCY of its country is collapsing.
Take the recent insane deadcat bounce and run for the hills, preferably the Swiss hills and convert all your holdings to Swiss francs.
In my view, LEN has been strong due to the following:
1) The Media
Catchy headlings like "Investor's Cheer Builder Lennar's Results" or "Lennar Lays Foundation For Recovery" have helped change short-term sentiment on the company. Add other "positives" reported by the media including the purchase of 10K shares by ONE director and the $800m tax refund (thanks to a large fire sale), and you might think that LEN is in a different industry from the rest of the homebuilders and won't share their fate. The run up has been a short-covering momentum play and any bit of perceived good news has helped it outperform its peer group since mid-January (including both the rise and latest retracement). The negative news (i.e. the news with substance) has been discounted for the time being. Sure a director bought some shares. But as one poster noted, a lot more selling by insiders has taken place since then. Yes, LEN's tax refund is a positive in that it raises cash. But let's not forgot they have a huge amount of debt both on and off balance sheet. Do you think Moody's is going to upgrade LEN anytime soon? I think not. This company has been taking major asset write downs and while that will eventually slow, they are now having to deal with negative operating margins.
2) A few Street analysts
A couple have gotten more positive on the stock, at least in the sense that they think the worst is over. In my view, they are mistaken even if you discount going out six months. I also believe Wall Street is a ego-driven business and sometimes you see these games where one analyst tries making a name for him/herself by trying to call a turn. But while those trying to call the turn get the headlines and TV play, most others continue to see fundamental deterioration. I'm not going to say LEN is going bankrupt because I think they won't. I will say though that LEN will continue to suffer along with the rest of the HBs, continue to record losses, probably through next year, and continue to see their balance sheet weakened.