And I will keep cost-averaging into this stock on the first of every month for the next year. Housing starts won't lie. I'll get my $12 - sometime between now and 2012. And when this guy runs, it's not going to be for a month or so. It's going to be for a couple of years or so. LAND is the single biggest cost for homebuilders, and Pulte owns 3 years of fully-developed lots and 10 years worth of land. Construction labor costs are the lowest in years. Read the conference calls. Homebuilders were buying premium lots in 2010 at below-replacement cost wherever they could find them. Buying and buying land. Why would they do that if there's no future in it? They are stock-piling land for the next turn in the cycle.
It's gonna add up. When? I dunno. But I know it will. Pulte is is the largest homebuilder in the United States. If it's "different this time" and guys like John Paulson, Bill Ackman (two HUGE bears) who are uber-bullish on residential housing - are wrong this time - then they're very smart and very wrong or very smart and very right. I opt for the latter.
It's pretty hard to argue with your analysis John. With your incredible fundamental analysis in the housing as well the tech sector - You make a compelling argument to at least have some PHM in one's portfolio. Best to you!
But just like everything else since it's such an easy pattern to spot it's amazing that it still works at all.
That looks like it's been pretty reliable for a significant amount of time and the carry cost to own it overnight with current rates is little.
Interesting. Especially to a fella that may be selling the last of his SSO's today. The last lot of my old "double ETF's" that I bought as investments ratehr than trades - now we all know they don't work so well.
Excellent post and very true on land control. When was the last time somebody saw lot development. At least a year process if the engineering and county controls are met. In Richmond Virginia the Savings and loans that have the foreclosed lots are holding out for the first values lent against the land. It is going to be expensive ugly if buyers keep holding off. I know REO will hurt sales but buyres are starting to get leery of impossible to clean titles and other frauds on the old purchasers and the lenders that could return the home to its original owners. PHM will blow soon enough I am in at the lows a few months ago and will continue to add on this and every pullback. Now who is the sheep and who are Coyotes on the home builders stock.