As the market improves which improves the value of their land holdings and with the huge tax loss carry forward they can use to shelter future earnings, they will become more attractive to other homebuilders. In my opinion a buy out will probably not happen because Ara still controls to much stock and I don't believe he wants to give up running the company.
It was a small bet on their turnaround. At $1.50 a share, I felt their wasn't much downside. Assuming they can avoid insolvency, (which I feel is a remote possibility with the FED holding rates near zero) I felt a doubling of the stock price is quite possible. Anyone following this company as long as I have, knows that if they turn a profit Ara will be quick to increase his and the senior managers bonuses, but again I feel a doubling of the stock price is possible if they can show a couple of decently profitable quarters.
Their high debt levels are left over from overpaying for land and acquisitions pre-crash. If the management wasn't so poor, they would have been able to mitigate this issue to a much greater degree buy now. As I have stated numerous times before on this board, this company is run to the benefit of Ara and his senior managers, not the stockholders or employees.