I have traded this thing from both sides of the fence for a long time now.One can make the case that at the very least its a dirty company operating with a lot of grey areas and at the most borderline fraud.I am not referring to the overall business at which also at the very least will slow to a crawls pace and at most at some point cease to exist,but rather the trading of the stock and the abusive practices of the company.Fist and foremost insiders selling of stock while exercising a buyback should be illegal.A company planning for its long term health and viability would try and hoard as much capital while facing lean times as possible.That should tell one that NVR is not in the business of selling homes but in selling stock/managing stock price ie enriching insiders.Selling homes is what they do but unfortunately not what they are.The stock has performed incredibly well in the past as they have road the coatails of an unprecedented liquidity bubble that is the same as a ponzi scheme.Like all schemes they eventually become unraveled and exposed.Unfortunately this company is only one of thousands that have come to define the US capitalist society.The theme is class warfare and what I call the looting of America quite simply by those who can.These guys have been incredibly smart in how they have managed the stock.By not splitting it and leaving it in the hands of a select few with no options to hedge while using short interest as buying power is ingenious.As far as the business due to the terms of the 93 bankruptcy they cannot get leveraged up at least on balance sheet.I would love to see a breakdown of whats off it as Im sure it would be Enronesque in many ways just a different business.Id love to know the arrangment they have with the Virginia bank that not only is the largest holder but probably buys its paper.What I suspect the next move these guys will make is to begin buying homes back from their new orders in order to keep the sale,reduce cancelation rate and maintain the company illusion as the inventory of used homes will be placed to pile up somewhere else off balance sheet.As for what I do with this thing and why I trade it is because I understand it.Currently I do carry a small manageable short investment position as when it implodes I want to get paid but also trade it actively in both directions as these guys are so good that as to when its foundation gets eroded is anyones guess.In my opinion this company is a personal piggy bank for insiders and a select few.The CEO is very powerful and politically connected right to the top.However so was Enron.Good luck to all.
With so few shares tradeing hands the stock is easily manupulated. As you say the price of the stock all but eleminates the average investor from participating in the game. With no option to trade the retail investor has no ability to buy or sell this stock in any meaningful way.
It is the same players at the poker tabel, they keep raising the bets knowing nobody will ever call there hand.