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Meritage Homes Corporation Message Board

  • justgivingadvice justgivingadvice Jul 6, 2007 7:45 PM Flag

    Bought 300 more shares today.

    When I bought my first 300 shares a few months ago, idiots like McCesium409 were on this board with nothing worth reading to say. I see that it is still the case today.

    Being that I am not an options player or a day trader, I posted then that I would average in, up or down, after a few months. I watched the stock run way up and scare away a few shorts - one of them was a good guy (sheldon_stein). Since then MTH has obviously turned south. (I hope shelton was able to get back in).

    I am down about 19% on that purchase as I did not sell on the run up. Todays "BAD" news was obviously built into the price of MTH and seemed to relieve investors and justify an uptick.

    As a result, I chose today to be my day to average in. I bought 300 more shares today and will now sit tight and reap the long term rewards. Though we may not have seen the bottom in MTH, I totally expect close to 100% return in two years on this stock. Remember the stock will go back up before the bottom of the HB market!

    Good luck longs.

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    • 2 yrs. ago this stock was $85. best of luck.

    • not to be argumentative, but there is a lot wrong in the market with these stocks. They can be great companies, but they can get stuck in a downward spiral that is severe.

      Consider that prior to ten years ago, construction made up 5% to 6% of GDP, but in the last ten years it has pushed up to around 11%. Not all is housing, but a good chunk of it is.

      Graph out the demand and supply curves on a piece of paper.

      Think about a normal housing market, stable etc.

      Then change it. Add low interest rates and other factors that push the demand curve out. More houses wanted, at a higher price, we are all getting rich (look at what the new demand curve is telling us � add a second demand curve further out, the new demand).

      then the sub prime lenders come in. Since more people can now �afford� houses, we see another movement in the demand curve out. This movement out in the demand curve causes another movement along the existing supply curve. The quantity supplied increases as does the price.

      This also creates a nice situation for house flipping (another push out in the demand curve, albeit a very temporary one.

      Then things change�.Interest rates go up. The �weak� variable loans fell. Lending rules get tighter, so fewer new loans can be generated, even if there were more buyers to attract. The demand curve shifts in. Not only a fewer houses wanted they are wanted at a lower price.

      This is bad. The market won�t clear fast, and not at good prices for sellers.

      I am waiting on all these builders, and I am not afraid to miss the bottom. If they got to $5, and then bounce to 7 or 8 before I buy them, it�s a lot better than averaging down to 5.

      • 1 Reply to declineofempires101
      • Sorry guys, have been, and still am, out of town. I enjoyed reading your posts.

        For staters, I invest through my Citigroup broker and I never margin. I do my own research, and he only buys what I tell him to buy. I do call him and ask his opinion first.

        I usually buy some Ishares in an industry and a couple of individual stocks to go along.
        (example IEZ, COP & KMP)
        (example IWO, BIDU, CSCO & FLEX)
        (example IYH & UNH)

        Then I pick a few mutual funds and stick with them.

        When I asked my broker about housing a few months ago, he suggested Ishares ITB. He said that he thought some builders could possibly turn ugly very quickly. I agreed somewhat, but I was disappointed that the ITB shares had not come down with some of the more reputable builders.

        After researching all the major builders, the one I felt that had the most negative stock price reaction vs their financial standing ended up being Meritage.

        I also new that MTH was very strong in Texas and that the Texas market is very active. I read all the stories about Texas not being profitable and determined that it was all a bunch of hog wash.

        MTH was the HB company that had good financials, easily disposable land options, was very strong in Texas to help get them through, and had a stock price that did not match!

        My broker did his research and said he too thoght it was a good buy as S&P and Citi both thought the stock was underpriced. We agreed to buy 1/2 shares then and 1/2 later, at my determination.

        This was a planned secondary stock which can be confirmed by reading my ols posts.

        Again I do not Margin or use options, I invest for a minimum two year period.

        Good Luck

        PS -
        McCesium409 posts under the name justgivingadviced and many others.

        I am now looking strongly at AHM (mortgage), but have some DD to do first.

    • although I certainly agree that Cesium is an idiot- have you given real thought to what you're doing?

      You obviously were wrong when you first purchased the shares. You now average down so you can feel as if youre losing less overall.

      You point to no evidence that housing is coming back or that the real value of MTH ( land assets) is near what it sells for now. Your argument seems entirely emotional- a really bad way to invest.

      I posted the following on some housing co message boards several months ago and probably no one got the picture. Lets see if you do.

      Lets compare MTH with XEC an energy co.

      MTH is losing money and sells at what relation to its net asset value? How far will the MTH's assets deteriorate in the next year? What is the cost of your money while you hope for profitibility?

      XEC selling at $40 has been appraised to have a net worth of between $57 and 68 depending on who does it? This uses $60 oil and about $6 NG. Certainly oil and gas can go below those levels but right now there is bonus value- and over the long term does anyone make the argument for lower prices? XEC is profitable now and increases its reserves each year.

      Justgivingadvice - as befits your screen name should you have given advice before as those who followed are down 19% ( plus cost of their money and opportunity cost?

      Be honest with yourself first and take a look at the example I gave you and HONESTLY and in an unbiased manner using FACTs make a case for MTH over XEC

      • 4 Replies to Fish2026
      • look at what morning star has on MTH
        Analyst Note 07-06-2007

        Meritage Homes MTH released preliminary second-quarter operating results Friday that indicate the company continues to struggle with weak demand in the majority of its markets. Sales of $569 million were 37% lower than in the year-ago period, while the backlog of $1.2 billion was down 39%. For the first half of the year, sales were down about 34%, indicating that our estimate of a 35% decline for the full year remains in the ballpark. However, our mid-single-digit operating profit assumptions are too high, considering that most homebuilders' gross profits aren't covering selling, general, and administrative expenses these days because of intense competition in markets where the big boys have too much inventory (most of the formerly hot areas). Add to this the fact that Meritage is going to take at least $100 million in pretax charges this quarter, and a loss is almost assuredly in the cards for 2007. Our fair value estimate will need to be reduced to reflect a worse year than we had anticipated, but probably not by enough to change our recommendation.

        Financial Health

        At 42%, debt/total capital is in the middle to lower end of our builder universe, and EBITDA covered interest expense more than 8 times in 2006. Our models show Meritage covering its interest commitments comfortably, even with drastically declining production.

        For Info they have a fair value on MTH of $57 so lets take 30%-40% Avg. 35% discount for more future bad news and we still get a fair value of about $37, so currently MTH is trading at a 45% fair value discount at the current price of about $21.50

      • Just because a stock goes down doesn't mean that you were wrong to buy. Do you think every stock Warren Buffett buys goes up immediately?

        When you buy a stock it is a statement that you are happy trading your greenbacks for equity in a company at that price. It doesn't have anything to do with a wiggly line on a computer screen.

        I bought some MTH at $32 and I am not particularly sorry. Every housing recession ends and the best positioned builders will come out ok. You just need to have some patience. If you're upset over buying it at $30, you should be glad you didn't buy it at $90. Bill Miller bought MTH at $59. I am happy knowing that I am not quite as dumb as him.

        A few weeks ago I heard a little girl at McDonalds say to her mom that she looked at their house on Zillow and saw that it went down. That is a pretty good sign that everyone in the world knows that housing is bad. That usually indicates a good time to start buying.

        I will probably buy my next set of shares at $20 which could be tomorrow.

      • I'm puzzled over your promotion of XEC over MTH. I would think that any prudent investor already has a substantial part of his/her portfolio in energy issues. If I were to hold only one stock it wouldn't be MTH, but on the other hand I don't think I would put every last dime in energy, either.

      • Hmm i didnt read the date on your post. IF you bought on July 6 you are now down on ALL the shares youve purchased.

        Anyway read the prior post and give us an honest response.

40.14+0.24(+0.60%)Jul 22 4:02 PMEDT