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Written by Jonathan Smoke
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02.29.2008 |
 Yesterday at the Wachovia Homebuilding and Building Products Conference, several big builders presented their current performance and strategies. As I listened in on several presentations, an ironic theme jumped out at me regarding the benefits and downsides of scale.
In Centex’s presentation, Tim Eller, Centex’s Chairman, President and CEO stated that a key part of their strategy is to concentrate investment in markets with greatest long-term profit potential that reward high relative market share. He later walked through internal analysis of how Centex’s operating margins and returns on assets were positively correlated with strong relative market share. | | No comments for this item |
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Written by Jonathan Smoke
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02.18.2008 |
 The educational sessions at the 2008 Builder Show repeated several themes. At the top of the list of the themes I heard were general angst with media and their portrayal of housing, green building, and market survival techniques.
I took heart that every survival discussion and many more sessions emphasized the importance of doing research and understanding your local market. That’s where we come in. | | No comments for this item |
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Written by Jonathan Smoke
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02.14.2008 |
 Yesterday the official 2008 International Builder Show kicked off in Orlando. The traffic congestion and massive show layout across the Orlando Convention Center didn’t look all that different from years past. Rumor has it that the show will likely have as much as a 20% decline in attendance, but there were still lines, reflecting that builders and suppliers are not giving up on 2008.
The least optimistic session of the day was delivered by three dismal scientists: David Seiders of NAHB, David Berson of the PMI Group, and Frank Nothaft of Freddie Mac. As expected, Seiders had the most optimistic forecast—for new home sales to begin to pick back up towards the end of 2008. The other two looked more towards the end of 2008 or into 2009 before sales pick back up. | | No comments for this item |
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Written by Jonathan Smoke
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01.23.2008 |
Is it a sign of the apocalypse or simply that a market bottom is in site that the public home builders staged a major rally today? While the Dow Jones Index shrugged off a massive decline to end the day up 2.5%, the public builders were up double digits.
XHB, the ETF SPDR from S&P for Home Builders posted a 10.5% increase, while Centex, Pulte and Beazer all posted increases in their share prices over 20%. | | No comments for this item |
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Written by Jonathan Smoke
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07.16.2007 |
 The public builder news late Friday was all about the Wall Street rumor that Warren Buffett was considering a stake in Hovnanian.
Could this be true? Or as the article in the Chicago Tribune quoted:
“‘It's just another junk rumor on a Friday,’ said Greg Palmer, head of equity trading at Pacific Crest Securities Inc. in Portland, Ore. ‘But if you put a big name to it, then away you go.’” | | No comments for this item |
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Written by Jonathan Smoke
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07.09.2007 |
 In our Builder News section, there are always multiple transcripts of investor conference calls and presentations to analysts by the public builders. These transcripts are great for staying abreast of what’s going on with the big builders. It’s also a great way to understand their business strategies. | | No comments for this item |
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Written by Jonathan Smoke
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05.31.2007 |
 Late Tuesday, Pulte announced that it was planning on a an additional cut of 16% of its workforce.
“The restructuring plan will result in a pretax charge of $40 million to $50 million, which will mostly be recorded in the second quarter.
‘The homebuilding environment remains difficult and our current overhead levels are structured for a business that is larger than the market presently allows,’ Pulte CEO Richard J. Dugas, Jr. said in a statement.
The latest cuts come on top of a 25% workforce reduction over the past year and a half, Pulte said.” | | No comments for this item |
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Written by Jonathan Smoke
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05.10.2007 |
 In the MarketBeat blog yesterday afternoon, David Gaffen posted the following comment on Toll Brother’s second quarter earnings release:
“There’s an interesting little note out of Toll Brothers today, saying that subprime lending problems are, in fact, hurting the luxury home builder, if in a roundabout way. Despite the small percentage of Toll’s customers who use subprime loans, ‘the impact of stricter lending standards arising from problems in the subprime market is negatively affecting affordability at lower price points,’ the CEO said. But of course, everything is contained, as some want people to believe.” | | No comments for this item |
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Written by Jonathan Smoke
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05.07.2007 |
 One excellent way to keep up with what’s going on in the home building industry is to read the transcripts from the public builders’ various investors calls and presentations.
Under the Fair Disclosure law, public companies are required to make material information available to all shareholders at the same time. As a result, most public companies, including home builders, release transcripts of their presentations and conference calls. | | No comments for this item |
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