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Beazer Homes USA Inc. Message Board

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  • tooltime469 tooltime469 Nov 19, 2005 2:32 AM Flag

    Just wait till November housing

    PART ONE
    Why do longs think if you short a stock and it goes up three bucks or four or five that that a cover will ensue. Just as they and I at times for that matter have been long only to have a stock go down. Did you automatically sell even if you strongly felt it was going back to your buy in or above because the fundimentals were good or it had news that should drive it back up. Do you sell and take the loss or do you buy some more as it falls so on the way back up you make money back to your entry point. I bought GILD before earnings in july at 46 only to see it go to the low low 40's a month latter, I bought more and finally sold in the beginning of october at 48.80 for a 6000 dollar profit. If I had sold at the low I would have been down 5000. Instead I bought more shares at 42.50 on the way back up and made a nice profit. I knew that Gild received royalties from tamiflu and bird flu was all over the news and eventually it had to pay off. And it did, but not because I panicked but because I believed my analysis of the trade. I did sweat and I sometimes doubted my trade but I stayed the course and made money. I feel the same way here being short because I am willing to take the pain of a few more points because I believe in three months not three days I will be ahead nicely on this trade and I have made a nice profit shorting toll,kbh,mdc and mth last month to afford it. I have to go with my analysis that this sector moves in unison and that the future on july 28th of 2005 looked alot better for BZH when it topped out at its previous high of &66 than it does on november 18th 2005. Housing starts are down,inventories are up,morgages are higher and going higher, three more rate hikes are on the way, and prices will come down as material costs go up. If you believe its worth more now than it was at the height of the Home Builders index than you should buy at 69 on monday. Me, I'll keep tacking on 100 shares at every dollar increase from here. I just think allot of the people here saying its going to 100 are not invested because if I believed a stock I had was going up thirty points I would be buying right here. The only posts I see here that state an entry point with a price attached are the shorts. This was short covering from people short at 54,55,56 and up to the 60's level. If you shorted in the last two days and covered but didnt re enter you are to weak to short and make money on these kinds of stocks. These are not day trades these are weeks and sometimes months long trades that you have to be committed to. If you can not do that you can not successfully short these for big gains. If you shorted tol at 45 there were plenty of times you felt nervous but if you held out it went to 33. How many long positions have you had that went up 12 points in a month and a half that didnt make you nervous. Or better yet how many went up 12 points in six weeks.
    And another thing------------

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    • "I have to go with my analysis that this sector moves in unison and that the future on july 28th of 2005 looked alot better for BZH when it topped out at its previous high of &66 than it does on november 18th 2005. Housing starts are down,inventories are up,morgages are higher and going higher, three more rate hikes are on the way, and prices will come down as material costs go up."

      tool, never thought of it that way. I'm amazed that BZH has held up so nicely with all of the negative news. I didn't think it could possibly break the all time highs. You're right, a break of the all time highs assumes that these are the best of times for BZH. It is not.

      I'm short TOL and there's been many times when it goes up when I felt like covering. The up and down swings are pretty high for my tolerance, but the case for a slow down in housing is pretty strong. The only way I can calm myself down is to think long term and imagine whether next year the stock price of the housing builders will be up or down? Will houses sell for more or less next year? If the answer is down, then no need to bail out, just keep the course. Psychology is changing in the market and looking at some of the inventory increases, it looks like everybody is starting to stampede into the exits.

      Existing home sales come out 11/28/05 (Monday after Thanksgiving) and new home sales the day after that. I am looking forward to it. From all of the news that I read, it should be a good one for the shorts.

      • 3 Replies to mo_board2003
      • BZH now has the highest P/E of the major home builders. This industry is tied to one another, If the real estate market continues to decline it is unlikely that BZH can matain the same revenues as 2004-2005. The E will evaporate and the P will follow. I think what alot of people do not understand is that THis is a head fake,nothing more but psychological warfare on short interest. What exactly has changed in the housing market in the last two weeks. Housing starts are down 6.8 percent thats the only news besides Toll guiding estimate down. Stocks do not rally on bad news unless there are ulterior motives. BZH does not have the cash to buy back 10 million shares of this stock. Total cash is 8.1 million thats enough to buy 117,000 shares at this price of 69. Total debt is 1.25 billion dollars. And profit margins are a pathetic 5.26 percent.
        This is the latest tactic of the buildes to prop up there share prices. Tendered offers as performed by BHS. And share buybacks ie.. BHS. If a company can find no better way to invest its cash in the company than to buy its own stock instead of investing it with an objective to increasing revenues, increase revenues and the stock price will take care of itself. Thats how you know, they know revenues are falling into the future. They knew if they could just move this up there would be massive short covering because of the high short interest. This is a 4th quarter prop job to satisfy the money managers. This bull rally is engineered by computer programed trades, They will take high enough to get all on board, Then they will sink the ship with all hands on deck right after the new year. Look at the DOW 2 year chart and see what happened to the last 4q rally after jan 1st. Ask youself one question, What is a strong enough catalyst to drive the market higher after DEC 31.

        tOOL

      • When TOL's announced a lowered guidance for next year it sent the major r/e stocks down...I take this as a sign of more to come...

        Wait for the revised earnings forecast to come...reports of inventories rising...

        What amazes me is the number of r/e's short/long term debt is so HIGH...look at the b/s.

        Can you say cash crunch? Layoffs?

        The insightful messages posted by tOOL and mo_board are most helpful...thanks!

        Happy Thanksgiving!!

      • If BZH breaks below $67.50. Look out below, double top.

        BZH business model better than ever, that is why it broke highs correct? Don't think so.

    • Add the word Dr. before tooltime469...i felt like i was back in college reading my thesis...thanks.

    • PART TWO

      And I agree with the poster that said psychology drives the market. Home sellers are beginning to lower there prices to sell, And as the rates go up and there are less buyers this will feed on itself the same way this short squeeze did today. If you need proof of how powerful psychology can be on a market look no further than BZH today. Well that works in both directions as well as real state and all commodities markets. My analysis leads me to the belief that the housing markt went up to high to fast for reasons that are akin to a perfect storm theory of events that came together. 60 year low interest rates being one of them,tech bubble being another, and the belief that if you did not buy now you would pay more if you waited. The realtors had a hand in this last one. They sold people on the belief that real estate is somehow special as an investment because there not making any more of it. In the end they will all realize that if your paying a 500,000 dollar mortgage on a 350,000 dollar house you still lost 150,000 dollars. It will look alot like a short squeeze when there ARM monthly payment goes up 30% from where they purchased. What do you think they will do if there making high monthly no money down mortgage payments on a house that is worth less than the mortgage. They will walk away in droves and cover there losses and live with the bad credit rating. tOOL

 
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