Negative Book Value! Won $230 + million from Tax Payers, as a form of bailout money to pay off most of their DEBT. Overvalued by a HUGE HUGE margin. THis puppy should pullback to $5 bucks. Given the numbers from the existing/new home sales, (HOV) has not benefited that much given that inflated report. That $8,000 dollar credit for home owners will end by this month. Bail Out Ben is not going to keep interest rates at these low levels, in addition, the bond market is pricing in a rate increase. This stock should be trading in the $3 dollar level. This stock trades hand to hand with (BZH). The short ratio is high very high against this 3rd rated home builder.
This will be a great short in the price range of $7 to $8 bucks. The retail short sellers got squeezed out and were replaced by the hedge fund/investment bankers, and I would not doubt they were "shorting against the box".
Anything over $2 is really lucky for shoreholders. I was trying to short this in $4's last year but just gave up interest. Now i reshorted alot at $7's friday.
The book value is negative and this stock isn't even allowed to pay a dividend on its preferred stock.
How in the world could this possibly trade $7. If it had low debt maybe it would have a chance to rebuild book value in a 2012 housing boom from the current -1.50 to the $3-4 range if everything went PERFECT.
But with 1.7 billion in debt and interest payments alone that eat up over $100mm a year. There is no way this company can have earnings to rebuild equity.
For $600 million investors are buying into a company with liabilities> asesets!
Wouldn't a real estate investor rather just take $600 million and buy some land and be even from the start. Rather than ponnying up $600 million and immediately be insolvent by $150 million and staring at annual interest payments on $1.7 billion in debt that will eat up all gross margin short of a 2002-2005 style housing boom?
HOV will offer some shares and then try to buy back some debt at discount. And guess will do this over and over and mangament will keep getting pay checks.