RE: [CANSLIM] MTH

From: "Fred Richards" <adrich@gte.net>
Subject: RE: [CANSLIM] MTH
Date: Fri, 15 Feb 2002 09:29:10 -0600

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A word of caution about home building from the Chapman letter this week.

"If you can believe this, the White House has warned Fannie Mae and Freddie
Mac, that they may be taking on too much risk in sub prime loans. Debt for
both enterprises rose from $518 billion in September 1997 to $1.26 trillion
at the end of September 2001, an annualized growth of 25% a year. The
mortgage asset portfolios have increased 150% in dollar volume and their
guarantees of mortgage-backed securities increased 40%. The Bush budget said
increased guarantee volume and retained portfolios imply increased credit
and interest rate exposure. Furthermore, the budget added, the hedging
transactions transform credit or interest-rate risk into counter party risk
(the risk that the counter party of a hedging transaction fails to honor the
contract). Thus, the GSE's management of counter party risk is of increasing
importance. This is of extraordinary significance. This means the Treasury
sees real counter party failures coming on the heals of Enron. It is an
edict to Fannie and Freddie, from which 38% of new loans have been sub
prime, to stop writing and insuring them. That means housing starts and
sales will fall as well as prices. There will no longer be a push from the
bottom to buy the low cost house to propel its current owners upward. Then
the failures begin, and the losses for these GSE's, then the major fall in
housing prices. It's all right here. If you ever wanted to sell do it now,
the game is over. That also means all that liquidity supplied to the housing
market, that ended up reducing debt and supplying liquidity is at an end.
This is a momentous financial event. Take advantage of it, sell real estate.
This, of course, will adversely affect the stock market and expedite
deflation leading to deeper recession because not only will the real estate
bubble break but also the debt bomb will explode and in turn, the derivative
debacle will follow."

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley
Sent: Friday, February 15, 2002 8:49 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] MTH


Hi Harbol,

I continue to see strength in the home builders group, and suspect it will
be sustained for most of this year at least. I have several in my VR Fund,
and all doing well, OHB (small cap, thinly traded) already hit another new
high this morning on volume.

With MTH, I would be cautious as the earnings forecast consensus at DGO
indicates +8% this year and +15% next year. Most of the home builders I have
looked at have much stronger forecasts.

Tom Worley
stkguru@netside.net
AIM: TexWorley
- ----- Original Message -----
From: "HARBOL GAURANG" <morsandbihari@hotmail.com>
To: <canslim@lists.xmission.com>
Sent: Friday, February 15, 2002 9:25 AM
Subject: [CANSLIM] MTH


> Hi,
> This is my frist post to this group. I've been frequenting this group for
> quite sometime.
>
> For MTH I'm seeing a long cup (starting from July 01) with 3weeks of very
> tight handle. During the bottom and uptrend, there are more nos of up
volume
> weeks where price is also up.
>
> Fundamentals looks good.
> %EPS Chg recent quarters: 26.9%, 33.0%
> %Rev Chg recent quarters: 44.5%, 52.5%
>
> But %EPS Projected CFY = 8.92 and %EPS Projected NFY = 14.89
>
> Thanks,
> Harbol
>
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