The mkt is near all-time highs. The sector is what it is. The 2-bit brained traders trade it as a high-beta, non-differentiated blob. I care about how my the companies I own perform. I said I'd lighten up nr 4/20 & I did, mostly by selling all of my TMHC, so now I'm down to only TOL & WLH. I'd buy some DHI on the next drop.
As for WLH, Q1 results & comments make e think they can earn $3 in 2017 vs consensus $2.66. They have to execute, esp on gross mgn, but if they do, consensus should keep rising. Q2 is a tough comp, but Q3 is an easy comp, so there should be buying opps til October.
GRBK had another good qtr & after looking thru the 10Q, I am more baffled than ever why it deserves the highest, yes the highest, PE in the entire group. I don't get it. I shorted some @ $7.60 the day before they announced & more @ $7.50 the day after.
That seems like a better sell than selling WLH.
I'd love to hear someone explain the PE on GRBK. It trades @ BV, which in a vacuum, I guess could be reasonable, but it has lousy asset turnover & below-avg margins, so the result is a ridiculously high PE. It also has nothing special for backlog or lot position / basis.
I ended up buying back about 75% of the WLH I had sold @ price about 9% below where I sold it.
I ended up buying back all of the TMHC I had sold @ price about 2% below where I sold it.
I ended up buying back all of the TOL I had sold @ price about 1% below where I sold it.
We'll see what spring brings. I will probably lighten up again before 4/20.
PHM would have to fall at least 15% more relative to TOL for me to want to switch into PHM.
(Other than DHI) This sector has had no momentum for 3 YEARS, which is why many of them look so cheap.
I just looked at TOL's chart & #s.
3 yrs ago TOL was @ $38 & it earned about $0.90 in 2013.
Now TOL is @ $29 & it could earn about $2.50 in 2016. I bought a lot of TOL @ $25 & below even though the $2.50 was hardly in question, given their backlog & delivery cycles.
This is how people treat stocks they consider "ultra-cyclical". They ramp them up early in the cycle & then all want to call the top of the cycle. I generally HATE "ultra-cyclical" stocks. I only bought these builders b/c they got so cheap & I really think the common-wisdom is wrong this time. New home sales have not spiked in this cycle so they still have room to run. Homebuilding is not the "ultra-cyclical" part of the US economy today. Plus, the US economy is weak, so the Fed is going to keep rolling back its rate hikes. I've been saying that for yrs now.
Well, I bought back below $12.50 about 1/3 of what I sold above $14.25 & now it it almost back to $13.50.
The bizarre volatility continues as WLH seems to be at the top or bottom of the % changed list in the group every single say. Moron traders playing moron games.