morgage rates are still very low so i think we will see some up movement with the forcast for growth in 2004 earnings of 4.25-4.30.A 5.75% 30yr.is still a great rate,some people are discounting the builders as if the rates are above 8%.
There he goes again with an ad hominem attack to make his case.
I'm amazed at Alex 144a, because he should welcome the buying opportunity that Barbara Allen is suggesting.
Imagine buying some DHI at 10 or some CTX at 25. Wouldn't it be a great time to back up the old truck and take out a second mortgage?
I think the stocks would be very attractive down 50 to 75%.
Thanks for that wonderful post. There are others who were disturbed by that interview and feel that Horton is absolutely not cyclical and deserves a higher PE. The home builders do not have the respect they deserve.
Hopefully they will continue to do well in spite of Wall Street's opinion.
I looked up Barbara Allen's name on the 'net. I didn't want to spend much time on this (especially when they have pictures of her, uggghh*) but I did recall that she was very negative on the builders late last year, and quoted by the ever-eager bears. And here are a few quotes from here this year, dated March 19,2003.
<<< Barbara Allen, housing analyst at Natexis Bleichroeder, a New York-based investment brokerage, believes the market is sending a message "that earnings are not sustainable and that this could be the peak of the current cycle in the industry." She believes some companies, such as Lennar, have recently reported high earnings based on past orders, which don't imply good results in the future.
Lennar might disagree. The company posted a strong outlook Tuesday with the release of its earnings. Lennar said net income for its fiscal first quarter jumped 48%.
But Allen isn't convinced. She thinks that as interest rates rise amid an economic pickup, homebuyers will turn their backs on the market. "Housing hasn't been in a recession, so how do you benefit from an economic recovery if you've never been down?" she said. >>>
Of course, back on March 19, DHI was under $20/share! And if you look back at the historical prices for March 19, most homebuilder stocks are up 30-70% since then. If you'd listened to old Barbara, you'd have missed a phenomenal move in just a few months time. Now she's clearly pissed that she was so wrong (again), and she's calling for the HB's to fall 50%. What a moron. She just doesn't get it. Evidently she has been an analyst on home retailers like Home Depot, and her track record there is apparently decent. But on the homebuilder stocks, she's totally out of her league. Here's to Barbara Allen, who may yet top Ivy Zelman as the stupidest homebuilder analyst on Wall Street.
* - note ugly picture of Ms. Allen here, near the bottom of the linked page. At your own risk, barf bag not included:
Good find Steve, and great post. I recognize the name of Barbara Allen, the highly negative "analyst" of that article. She's been down on the homebuilder stocks from MUCH lower levels, going back many months if not years. She's been wrong, wrong, wrong, but she's sticking to her story. I'm surprised she hasn't been fired by her firm, but then again who ever heard of Natexis Bleichroeder? The only other time I ever heard of them was when they were quoting Barbara Allen. Barbara seems to be an even worse homebuilder analyst than Ivy Zelman of CSFB, if you can believe that's possible. (Ivy Z. changed her rating on HOV from "neutral" to "underperform" when HOV was at $46 this year, just before it ran up to over $70).
The only reason Barbara Allen is even being quoted is because the bears love her, IMO. I'm sure you, and most other long term longs have seen how good the homebuilder shorts are at getting their BS into the media. Barron's loves to knock the homebuilders, claiming it's "just a bubble", "remniscent of techs in 2000", etc. They quote idiots like Raj Gupta, David Rosenberg, etc. - not because they have a good track record in the sector, but simply because they are bearish. When was the last time Steven Kim's (SSB) views got any "airtime" in the major media? Oh I know - he was once again rated the best analyst on the construction industry by the Wall Street Journal, about a month ago. And it wasn't a subjective rating; Steve Kim won simply by giving the best advice to his clients, and he's been (and still is) very bullish on the major homebuilders.
Seems to me that anyone with an MBA can get a job on Wall Street as a homebuilder analyst. I think Wall Street has such a low opinion of the builders, they put their rookies in that sector. Barbara Allen is probably just window dressing, a woman for the sake of having a woman, but look at her horrible track record. It's a shame that her views get any airtime at all.
Rates ARE low from an historical perspective, but my guess is that the new housing market has been a rate junkie.
As rates went down, morons screamed about "affordability" and how it's never been better, which encouraged people to jump in and many got ARMs. Now it's the reverse. The rate situation ain't getting better, probably will get worse, but who knows, and there is no longer a sense of urgency on the part of buyers.
Maybe the housebuilders have another good quarter, but I think the fix is in. The future is going to be a lot less interesting for these companies, at best. It could become a major f*ing disaster. Note that your company didn't build up cash during the quarter or the great bull run for that matter. Sure did build up a lot of inventory and new orders. Just hope for all America that this backlog bull