Go to Jeff Salisbury LWGate Home Page.From: "Winston Little" <wlittle1@peoplepc.com>
Subject: Re: [CANSLIM] Homebuilders- fundamentals
Date: Thu, 2 May 2002 10:43:44 -0400
Next Article (by Date): Re: [CANSLIM] Today's IBD "Big Picture" comments... Ian
Previous Article (by Date): Re: [CANSLIM] Homebuilders- fundamentals Eric Jaenike
Top of Thread: Re: [CANSLIM] Homebuilders- fundamentals Eric Jaenike
Next in Thread: Re: [CANSLIM] Homebuilders- fundamentals Davellil5@aol.com
Articles sorted by: [Date]
[Author]
[Subject]
This is a multi-part message in MIME format. - ------=_NextPart_000_008C_01C1F1C6.3B86E780 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable I currently have no holdings in housing stocks. Three items which I believe drive status: 1) Interest rates are low. While ANY increase will have a big negative = impact in people's perception and initial reaction, the rates will still = be low compared to the last 25 years. ARMs are also more popular, and = allow some countermeasure against rising rates, and were not used 15 = years ago. A rate rise will probably affect the lower priced end (DHI is = big here) more than the upper end. 2) 1997 change in tax treatment of gains. Profits (up to $500,000 gain) = from sales are EXEMPT from tax EVERY TWO YEARS. This creates a big = incentive to keep on moving every 24 months. 3) Milder winter in northern states allowed for higher build rate in the = winter, probably lowering the spring surge in build rates. =20 ----- Original Message -----=20 From: Eric Jaenike=20 To: canslim group=20 Sent: Thursday, May 02, 2002 10:07 AM Subject: [CANSLIM] Homebuilders- fundamentals 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 - ------=_NextPart_000_008C_01C1F1C6.3B86E780 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 5.50.4522.1800" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3DArial size=3D2>I currently have no holdings in housing = stocks.</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial size=3D2>Three items which I believe drive=20 status:</FONT></DIV> <DIV><FONT face=3DArial size=3D2>1) Interest rates are low. While ANY = increase will=20 have a big negative impact in people's perception and initial reaction, = the=20 rates will still be low compared to the last 25 years. ARMs are also = more=20 popular, and allow some countermeasure against rising = rates, and=20 were not used 15 years ago. A rate rise will probably affect the lower = priced=20 end (DHI is big here) more than the upper end.</FONT></DIV> <DIV><FONT face=3DArial size=3D2>2) 1997 change in tax treatment of = gains. Profits=20 (up to $500,000 gain) from sales are EXEMPT from tax EVERY = TWO YEARS.=20 This creates a big incentive to keep on moving every 24 = months.</FONT></DIV> <DIV><FONT face=3DArial size=3D2>3) Milder winter in northern = states allowed=20 for higher build rate in the winter, probably lowering the spring surge = in build=20 rates. </FONT></DIV> <BLOCKQUOTE=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV> <DIV=20 style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: = black"><B>From:</B>=20 <A title=3Dericjaenike@yahoo.com = href=3D"mailto:ericjaenike@yahoo.com">Eric=20 Jaenike</A> </DIV> <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A = title=3Dcanslim@lists.xmission.com=20 href=3D"mailto:canslim@lists.xmission.com">canslim group</A> </DIV> <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, May 02, 2002 = 10:07=20 AM</DIV> <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] = Homebuilders-=20 fundamentals</DIV> <DIV><BR></DIV> <P>For those following the homebuilders, note that KB Home just = reported a=20 13.2% drop in April US orders. Of interest also is the recent insider=20 selling.</P> <P>Other data points: taking a 3 month average (Jan-March), new starts = slowed=20 at a 20% annual rate. Existing home sales fell 8.6% (reported 4/25), = and the=20 inventory of new homes rose to 4.8 months (also reported 4/25). = Housing demand=20 is seen slowing by the Nat'l Assoc. of Home Builders, who see housing = starts=20 rising 1.7% this year and falling 2.9% next year. They anticipate = single=20 family starts rising 2.4% in '02 and falling 3.6% next year. Single = family=20 sales are seen dropping 0.7% this year.</P> <P>These stocks have generally surpassed their peak historic = multiples. They=20 are also closely inversely correlated with interest rates. I believe = the=20 weakness in mid-March came on a small spike in the 10 yrs yield (can = someone=20 confirm this?). Of course, the counter argument is that they are = market share=20 gainers, have tighter inventory and cost controls than previously, = they don't=20 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=20 would be inclined to short them if they got toppy, but I think its too = early=20 to enter right now.</P> <P>Re: CCRN adv, the secondary on 3/21 created a spike in trading = volume to=20 8.1 million shares, or approx 15x current adv (and 40x that times = adv). If we=20 assume an average day's volume on 3/21, the current adv drops to 350k, = making=20 yesterdays volume 87% above average. Of course, that doesn't impact = ROE, which=20 is low, and M, which is dicey.</P> <P>Eric</P> <P><BR> <HR SIZE=3D1> <B>Do You Yahoo!?</B><BR><A=20 href=3D"http://rd.yahoo.com/welcome/*http://health.yahoo.com">Yahoo! = Health</A>=20 - your guide to health and wellness</BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_008C_01C1F1C6.3B86E780-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
Next Article (by Date): Re: [CANSLIM] Today's IBD "Big Picture" comments... Ian
Previous Article (by Date): Re: [CANSLIM] Homebuilders- fundamentals Eric Jaenike
Top of Thread: Re: [CANSLIM] Homebuilders- fundamentals Eric Jaenike
Next in Thread: Re: [CANSLIM] Homebuilders- fundamentals Davellil5@aol.com
Articles sorted by: [Date]
[Author]
[Subject]