Go to Jeff Salisbury LWGate Home Page.From: Eric Jaenike <ericjaenike@yahoo.com>
Subject: [CANSLIM] Homebuilders- fundamentals
Date: Thu, 2 May 2002 07:07:03 -0700 (PDT)
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- --0-1837393797-1020348423=:2677 Content-Type: text/plain; charset=us-ascii For those following the homebuilders, note that KB Home just reported a 13.2% drop in April US orders. Of interest also is the recent insider selling. Other data points: taking a 3 month average (Jan-March), new starts slowed at a 20% annual rate. Existing home sales fell 8.6% (reported 4/25), and the inventory of new homes rose to 4.8 months (also reported 4/25). Housing demand is seen slowing by the Nat'l Assoc. of Home Builders, who see housing starts rising 1.7% this year and falling 2.9% next year. They anticipate single family starts rising 2.4% in '02 and falling 3.6% next year. Single family sales are seen dropping 0.7% this year. These stocks have generally surpassed their peak historic multiples. They are also closely inversely correlated with interest rates. I believe the weakness in mid-March came on a small spike in the 10 yrs yield (can someone confirm this?). Of course, the counter argument is that they are market share gainers, have tighter inventory and cost controls than previously, they don't build as much on spec, etc. and thus deserve higher peak cycle multiples. I am skeptical of the group, but have no positions either long or short. I would be inclined to short them if they got toppy, but I think its too early to enter right now. Re: CCRN adv, the secondary on 3/21 created a spike in trading volume to 8.1 million shares, or approx 15x current adv (and 40x that times adv). If we assume an average day's volume on 3/21, the current adv drops to 350k, making yesterdays volume 87% above average. Of course, that doesn't impact ROE, which is low, and M, which is dicey. Eric - --------------------------------- Do You Yahoo!? Yahoo! Health - your guide to health and wellness - --0-1837393797-1020348423=:2677 Content-Type: text/html; charset=us-ascii <P>For those following the homebuilders, note that KB Home just reported a 13.2% drop in April US orders. Of interest also is the recent insider selling.</P> <P>Other data points: taking a 3 month average (Jan-March), new starts slowed at a 20% annual rate. Existing home sales fell 8.6% (reported 4/25), and the inventory of new homes rose to 4.8 months (also reported 4/25). Housing demand is seen slowing by the Nat'l Assoc. of Home Builders, who see housing starts rising 1.7% this year and falling 2.9% next year. They anticipate single family starts rising 2.4% in '02 and falling 3.6% next year. Single family sales are seen dropping 0.7% this year.</P> <P>These stocks have generally surpassed their peak historic multiples. They are also closely inversely correlated with interest rates. I believe the weakness in mid-March came on a small spike in the 10 yrs yield (can someone confirm this?). Of course, the counter argument is that they are market share gainers, have tighter inventory and cost controls than previously, they don't build as much on spec, etc. and thus deserve higher peak cycle multiples.</P> <P>I am skeptical of the group, but have no positions either long or short. I would be inclined to short them if they got toppy, but I think its too early to enter right now.</P> <P>Re: CCRN adv, the secondary on 3/21 created a spike in trading volume to 8.1 million shares, or approx 15x current adv (and 40x that times adv). If we assume an average day's volume on 3/21, the current adv drops to 350k, making yesterdays volume 87% above average. Of course, that doesn't impact ROE, which is low, and M, which is dicey.</P> <P>Eric</P><p><br><hr size=1><b>Do You Yahoo!?</b><br> <a href="http://rd.yahoo.com/welcome/*http://health.yahoo.com">Yahoo! Health</a> - your guide to health and wellness - --0-1837393797-1020348423=:2677-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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