On CNBC this morning they were talking about how the size of the houses he makes are larger than average, and how that kind of house is not doing as bad as small houses. Housing-watch.com seems to back this up
The market seems to have gone thru a different kind of "inflation expectations". People expected higher interest rates in 2003, so they hurried to buy. Then prices went up and they got into flipping, especting profits. Then they noticed prices were insane and expected a bubble, now they anticipate a recession and have stopped economic activity.
We remain optimistic. The demographics for our industry remain outstanding due to continuing, regulation-induced, constraints on lot supplies and a growing number of affluent households. With approximately 81,000 lots under our control, compared to 60,189 at FYE 2004, and a projection of approximately 265 selling communities by FYE 2006, we believe we will enjoy continued growth as we expand geographically, diversify our product lines and continue to gain market share.
Dec 5th 2006
Toll Brothers (Charts) reported a sharp drop in fiscal fourth quarter earnings early Tuesday, although the luxury home builder still managed to beat forecasts by a penny a share. It also saw a big drop in fiscal 2007 earnings, and more charges for pulling out of options it holds for land.
but despite that bad news, chairman and CEO Robert Toll said in the earnings report that the market for new homes may finally be leveling off after more than a year's worth of declines.
"Fifteen months into the current slowdown, we may be seeing a floor in some markets where deposits and traffic, although erratic from week to week, seem to be dancing on the bottom or slightly above," said his statement. "The metro D.C. suburbs of northern Virginia, which was the first market in which we saw activity slow, seems to have stabilized, although at levels much lower than those we have enjoyed over the past few years."
Interesting that we are in the 15th month of the slowdown, would never have guessed based on 2005 conference calls! How much insider selling the past 15 months? Just in the last 6 months insiders sold off 355K shares.
I definitely dont understand the optimism on Toll, they are overvalued and are shrinking their business (stock buybacks, shedding land, less sales, smaller backlog). But they claim NOVA has stabilized (which they WERENT claiming a month ago) so everything is ok.
p.s. I :heart: Ivy Zellman, she asks the toughest questions and you can always visualize the cringe whenever management of any homebuilder takes her call.
seems unprofessional to me as in lacking the polish and preparedness one expects or, as in underhanded, not quite ethically exemplary or, shoddy and incompetent?
you cant take seriously anything said by management of a US company anymore, particularly not a homebuilder, but really, any of them. the stakes are so high. when u consider they can walk off each year w something like $100mm, and there is no constituency preventing them from doing just that, not the government, not labor, not either of the Parties -- well, they'll say anything. to anybody. for that kind of money.
calmo, unprofessional in the sense they seemed disorganized and not properly prepared at times. They seemed to be "winging it".
We used to have our talking points right in front of us, and tried to take every question to one of our points. And either the CFO or I could answer almost any numbers question (margins, debt, inventory, etc.) without looking at our notes.
Toll would just go rambling for awhile. At one point he said something about 50 new congressman and senators moving to D.C. because of the elections, and that would create more demand. Uh, aren't 50 congressman and senators moving away too? He didn't have a point, he was just rambling.
One of my friends said he read from the Citigroup research note at one point (the note I quoted in my post "Housing optimists"). I missed that so I may have to go back and listen, but I can't imagine any CEO reading from an analyst's report during a conference call!
Toll was gracious and accomodating to a very unprofessional Ivy, who acknowledged her behavior by expressing "I'm suprised they let me in again" to ask another question.
Patrick, I think getting at the optimism issue was important ... the initial reports were all about Toll's optimism - and under questioning, Mr. Toll said the reports were wrong; Toll wasn't trying to "project optimism".
The remark about Toll selling at the right time was probably inappropriate, but when the CEO is telling you everything is great (summer 2005) - and then selling - and then everything goes bad ... I think the wisecrack is at least understandable.
I would have asked about their debt (increased $500 Million over last year), and whether their lenders have committed to further debt increases. I would have also asked them about their inventory: how much is finished goods, how much is WIP, how much land improvements and how much raw land. And, on land, I'd ask for the age breakdown. What percentage was bought in each year. I bet their lenders are reviewing their land holdings right now.
Toll seemed to wing it when he talked about land purchase dates, and for most analysts that is some of the most important information. Any land bought in '04 or '05 is probably already underwater - maybe even '03. In a building slump, land prices fall faster than finished goods. I'd want a pretty detailed breakdown of land aging so I could analyze their future losses under different scenarios.
But I doubt I'd get much. And I wouldn't care at all what Toll thinks of his prospects next year.
But I still think Zellman got to the key issue that Toll would answer - the issue of optimism that was misreported.
Patrick, I'm so totally frustrated by the fools pumping these housing stocks it really comes as no surprise you would claim Ivy Zellman is not "professional". In fact she has more experience covering the homebuilding sector than any of her peers and has a well-deserved reputation for integrity and accuracy in her research on these builders and the housing market. Hers was the only honest voice you heard on that call.
I suppose you would prefer bootlicks like Steven Kim, Margaret Whelan and Dan Oppenheim, though. Just so long as the stock prices keep going up, credit continues to be free, and inflation remains a fairy tale.
My favorite news headline today was that Toll "exceeded" estimates. Estimates that had been trimmed over 50% in the past few months. What an acheivement.
Purchases N/A 0
Sales 355,000 1
Net Shares Purchased
(Sold) (355,000) 1
Total Insider Shares Held 43.93M N/A
% Net Shares Purchased
(Sold) (0.8%) N/A
Net Institutional Purchases - Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) 4,320,200
This is about insiders and large shareholders heading for the exits.
Nothing unusual, out of ordinary, beyond the pale, unprofessional,illegal, about this.
The only issue I have is how the public can claims the least bit surprised by what went down today. The information about insider selling, large shareholder selling has and is public knowledge.
said Mark Fitzgibbon, director of research at Sandler O'Neill & Partners LP. "Credit quality has been deteriorating for two quarters and we think the pace of deterioration will accelerate this quarter."
Thanks for the humor donna. Today I need it.
Itty bitty thing: From my personal depressor agent Ron The information about insider selling, large shareholder selling has and is public knowledge
So you figure we should stage a comparable televised coference call right after these CEOs leave and highlight the massive insider selling in the HB market so that the information is equally public knowledge?
I don't know what is propping up the sentiment on housing. Do the analysts all own houses and are they afraid that if they are negative they'll lost value on their own house?
Bob Toll is trying to get people to read between the lines, really saying, "I don't know what's going to happen by my instincts say we have a hard time coming but I can't say that outright as that would not be representing stockholder interest which is my mission?"
So, people should stop listening to the words and start examining the situation.
It's over, and will be for several years. We're just polishing brass on the Titanic. It's all going down anyway soon.
No need really, just go to YAHOO and look up insider selling for the stock.
Before I buy a stock I always check on insider trading and keep an eye weekly on that indicator.
Saved me many times.
I think the whole CC business is a waste of time, investors should read 10K's and other related financial disclosure informattion before making investments. Who cares what a company President says at a CC.
I'm going to crib from a post I made at the NJREReport earlier.
Down at the bottom of Tolls Q4 info they noted that they expected to sell between 6,300 and 7,300 homes (noted in Bloomberg story) in '07 at an average price of between $660K and $670K (not noted by Bloomberg [at least in update 6]).
In the third quarter their prediction was for more homes 7,000-8,000, but at a lower average price: $635K to $645K.
The question I hoped someone would have asked this afternoon was:
In a softening market, particularly in the Northeast (relatively higher priced homes), what do they know now that makes them think they can raise prices that they didnt know three months ago?
Also, I got this bit of contradiction from the first graphs of the Bloomberg story:
Toll Brothers Inc. said the U.S. housing market may have reached bottom as the largest builder of luxury homes reported the biggest drop in quarterly profit in 16 years.
Net income in the three months ended Oct. 31 fell 44 percent Fiscal 2007 earnings may drop as much as 62 percent,
My question here, if they expect profits to drop more next year why would they call this the bottom?
As noted by another poster (BC Bob) at njrereport, also, if the bottom is in, why are they taking so many land write downs and letting options expire?
Ron, I've also found 10Q's more valuable than conference calls. However, occasionally the tone of voice used or responses of management give a fairly clear read on whether they are truly optimistic or depressed. The integrity and quality of both management and accounting is sometimes highlighted by tough questions.
Rarely are industry or economic forecasts of CEO's of any value except in regards to current industy conditions or as contrary indicators. (An exception is Pierre Lassonde at Newmont.)
CR. Your comments from conference calls are appreciated.
Ok, ron I guess that's what I was trying to say that the CC is a marketing tool (and yes I know where to find insider information).
It is amazing that Credit Suisse's Ivy Zellman can make an appearance and ask some fairly embarrassing questions. Although this doesn't get edited out, I wondered exactly how 'live' and unedited this CC was.
I could manage listening to it up to Zellman's point in the call and side with CR that Bob does sound like someone who is not in command of his company's business. What was Toll Bros' weakest market? Bob needed to shuffle papers for that one and basically was shuffling for most of the questions. As a public relations skit this is not a good flyer.
Finally got to listen to the call, Ivy DESTROYED Bob Toll, listen to his tone before and after she was on the phone he got down right quiet.
I think Bob Toll is very smart (and extremely egotistical), he knows that if he declares a bottom all attention focuses on that. Not on the horrible numbers, not on the writedowns, not on their horrible guidance (and obvious "optimistic" guidance relative to the data). So many people were so busy trying to figure out if it really was a bottom he escaped the call without too many thinking that he just laid a big old poopy on the stock.
Toll's ego is completely wrapped up in this thing, he has had it so good for so long you can tell he isn't used to taking the hard questions regarding the bad times.
The NYSSA conference is tmw and the next day the Q&A sessions should be a lot of fun.
CR,
The 50 defeated GOP congressfolk will not nesc be heading back to the hinterlands, they will prob stay in DC as beltway bandits, thus a net increase in demand for DC RE. That being siad, 50 is not a very big number rel to the market size. On the housing stocks, keep in mind the very fragmented nature of the induet stry. The publically traded firms should have better access to capital than the mom and pops, many of whom are likely to go belly up in the downturn. Thus when the cycle turns, optimistically in mid 08 or 09, they will be able to emerge with a higher market share. Still think it is premature to invest in the group, but when they get down to about 80% of book value they will be interesting to a patent LT investor. I was a big early bull on the group back b4 the bubble started and that was the valuation I was picking the things up for (late 98 early 99) Had 10% of my mutual fund in them (prospectus limit for an industry). Left the job long b4 the cycle ended so cant claim to have sold at the top however.
On the whole, I didn't think this rose to the level of Jeff Skilling calling Richard Grubman an "asshole" for wanting to see Enron's cash-flow statement, which phenonmenon underpins Tanta's CCCCCC* rating for harbingers of doom. We're getting there, though, especially when you combine Ms. Zellman's Kool-aid question with Toll's Claude Raines imitation at the homebuilders conference when Hovanian suggested that gambling might be going on. Still; conferences don't count and failure to answer the question with anything approaching a "fact" may only mean that Toll will be announcing his candidacy in '08 and needs to get some practice in. Come to think of it, maybe that's why he's making a veiled offer to sell some of his "Quick Delivery Homes" to members of the incoming House majority . . . you may think this is ridiculous, but I read the following Toll quote from the call on Mish's site and realized that Bush has said exactly the same thing on more than one occasion:
"Well I referred to somebody else's belief but let us say that I believe, which I am unwilling to make a statement on, to assume your proposition that I believe, which I don't necessarily, but let us assume that I do, your question why wouldn't I buy stock ... "
Unoptimistic Optimism or Faith-Based Homebuilding? I distort; you deride.
*Conference Call Catastrophe Canary in the Coalmine Coefficient
Tanta, another interesting aspect of that exchange is that Toll disingenuously interpreted Zellman's question about buying back stock as meaning his company doing buybacks. He responded that he would rather hold cash for land purchases.
Her pointed question was in reference to Toll sell his own stock in the Summer of '05. The inference was that if he was so optimistic about '07 why wasn't he buying stock personally. Indeed, insiders have been doing the opposite.
Toll's reputation as a straight shooter is 180 degrees off. He's a hypocrite and a liar.
Zellman's sin is that in a sector so abundantly populated with dishonest people is that she refuses to drink the "kool aid" and presses them to provide verifiable facts.
She has her counterpart in one or two brave White House correspondents who ask hard questions of the Bush administration.
Yeah, number2son, the whole insider selling question followed by corporate buyback answer part was actually right where I lost it. My bullshit detector just screams when stuff like that happens. People are free to think Ivy Zellman is rude if they want to--my own view is that this isn't a tea party, folks, it has consequences--but no one can really say her question was too subtle to be understood properly by anyone who got through Equities 101. You're left with two options: Toll is too dense to follow idiomatic English, or Toll is playing dumb and hoping to distract us all with some bright shiny object. It's like Bush: if you can find comfort in chosing one or the other you're braver than I.
We had Mrs. Zellman in to speak on a panel at our business school. She was smart, outspoken, and very forthcoming about the number of times that she had been threatened with being fired by various CEOs. She was also quite happy that there is now a giant freeking chinese wall protecting (kinda) the research department.
see the David Leonhardt article in today's NYT. if u have to sell today, you're looking at a 10-20% drop in price from last year. he highlights recent auctions in Naples FL, an obviously high-flier, but i think the same is true around the country, based on some recent auctions i've seen in Midwest.
In case anyone's interested Citi just raised it's outlook for the HB industry and key players in particular (as reported via MarketWatch: http://www.marketwatch.com/news/yhoo/story.asp?guid={9D93D6B7-8AC7-4B3C-8323-672086442DA4}&siteid=myyahoo&dist=myyahoo ) !
We really do have a bifurcated view of the housing market & industry and the economy (one could saw chasm but that's alarmist, right ?). Time will tell but it doesn't seem as if anybody could look at the graphs ala CR's work and argue that there's not a bubble to work off.
Julian Robertson is quoted in Herb Greenberg's column as saying this is a n irrational bubble worse than '00.
Sigh. As other commentors it escapes my grasp and comprehension how one could reach the 'bottoming' conclusions. On the other hand in prior years we'd have had nothing but the headlines to go on instead of the analysis and charts herein.
Of course just as many ex-Congressman and Senators will probably be leaving D.C., so it was difficult to understand how this would impact their business in a material way.
But Washington DC is a black hole, what goes in never comes out.
I walked into this one, do not see the outcome. Yesterdays bustling warehouse, once people come and go always. Once I stand here, look at the all kinds of the fun things, which is also fun. Now it is quite such as the winter night in the street, only the lighting of street lights shine ourselves, to the lonely. Just in this situation I will think the hero money, as long as I think it, I will feel I am not lonely, the money is always in my heart I am not of myself only.
I had thought very long has not said the mouth, can only want the psychological words which said to her to swallow from the mouth to the belly, I decide to sell cheap rf gold, in order to with my girlfriend forever in the same place!
On CNBC this morning they were talking about how the size of the houses he makes are larger than average, and how that kind of house is not doing as bad as small houses. Housing-watch.com seems to back this up
The market seems to have gone thru a different kind of "inflation expectations". People expected higher interest rates in 2003, so they hurried to buy. Then prices went up and they got into flipping, especting profits. Then they noticed prices were insane and expected a bubble, now they anticipate a recession and have stopped economic activity.
I posted this on a another site today,
What a difference a year makes:
Nov 8th 2005 Press Release: Toll Brothers:
We remain optimistic. The demographics for our industry remain outstanding due to continuing, regulation-induced, constraints on lot supplies and a growing number of affluent households. With approximately 81,000 lots under our control, compared to 60,189 at FYE 2004, and a projection of approximately 265 selling communities by FYE 2006, we believe we will enjoy continued growth as we expand geographically, diversify our product lines and continue to gain market share.
Dec 5th 2006
Toll Brothers (Charts) reported a sharp drop in fiscal fourth quarter earnings early Tuesday, although the luxury home builder still managed to beat forecasts by a penny a share. It also saw a big drop in fiscal 2007 earnings, and more charges for pulling out of options it holds for land.
but despite that bad news, chairman and CEO Robert Toll said in the earnings report that the market for new homes may finally be leveling off after more than a year's worth of declines.
"Fifteen months into the current slowdown, we may be seeing a floor in some markets where deposits and traffic, although erratic from week to week, seem to be dancing on the bottom or slightly above," said his statement. "The metro D.C. suburbs of northern Virginia, which was the first market in which we saw activity slow, seems to have stabilized, although at levels much lower than those we have enjoyed over the past few years."
Interesting that we are in the 15th month of the slowdown, would never have guessed based on 2005 conference calls! How much insider selling the past 15 months? Just in the last 6 months insiders sold off 355K shares.
I definitely dont understand the optimism on Toll, they are overvalued and are shrinking their business (stock buybacks, shedding land, less sales, smaller backlog). But they claim NOVA has stabilized (which they WERENT claiming a month ago) so everything is ok.
p.s. I :heart: Ivy Zellman, she asks the toughest questions and you can always visualize the cringe whenever management of any homebuilder takes her call.
seems unprofessional to me as in lacking the polish and preparedness one expects or, as in underhanded, not quite ethically exemplary or, shoddy and incompetent?
you cant take seriously anything said by management of a US company anymore, particularly not a homebuilder, but really, any of them. the stakes are so high. when u consider they can walk off each year w something like $100mm, and there is no constituency preventing them from doing just that, not the government, not labor, not either of the Parties -- well, they'll say anything. to anybody. for that kind of money.
calmo, unprofessional in the sense they seemed disorganized and not properly prepared at times. They seemed to be "winging it".
We used to have our talking points right in front of us, and tried to take every question to one of our points. And either the CFO or I could answer almost any numbers question (margins, debt, inventory, etc.) without looking at our notes.
Toll would just go rambling for awhile. At one point he said something about 50 new congressman and senators moving to D.C. because of the elections, and that would create more demand. Uh, aren't 50 congressman and senators moving away too? He didn't have a point, he was just rambling.
One of my friends said he read from the Citigroup research note at one point (the note I quoted in my post "Housing optimists"). I missed that so I may have to go back and listen, but I can't imagine any CEO reading from an analyst's report during a conference call!
Best Wishes.
Toll was gracious and accomodating to a very unprofessional Ivy, who acknowledged her behavior by expressing "I'm suprised they let me in again" to ask another question.
She did herself and her employer a diservice.
Patrick, I think getting at the optimism issue was important ... the initial reports were all about Toll's optimism - and under questioning, Mr. Toll said the reports were wrong; Toll wasn't trying to "project optimism".
The remark about Toll selling at the right time was probably inappropriate, but when the CEO is telling you everything is great (summer 2005) - and then selling - and then everything goes bad ... I think the wisecrack is at least understandable.
I would have asked about their debt (increased $500 Million over last year), and whether their lenders have committed to further debt increases. I would have also asked them about their inventory: how much is finished goods, how much is WIP, how much land improvements and how much raw land. And, on land, I'd ask for the age breakdown. What percentage was bought in each year. I bet their lenders are reviewing their land holdings right now.
Toll seemed to wing it when he talked about land purchase dates, and for most analysts that is some of the most important information. Any land bought in '04 or '05 is probably already underwater - maybe even '03. In a building slump, land prices fall faster than finished goods. I'd want a pretty detailed breakdown of land aging so I could analyze their future losses under different scenarios.
But I doubt I'd get much. And I wouldn't care at all what Toll thinks of his prospects next year.
But I still think Zellman got to the key issue that Toll would answer - the issue of optimism that was misreported.
Patrick, I'm so totally frustrated by the fools pumping these housing stocks it really comes as no surprise you would claim Ivy Zellman is not "professional". In fact she has more experience covering the homebuilding sector than any of her peers and has a well-deserved reputation for integrity and accuracy in her research on these builders and the housing market. Hers was the only honest voice you heard on that call.
I suppose you would prefer bootlicks like Steven Kim, Margaret Whelan and Dan Oppenheim, though. Just so long as the stock prices keep going up, credit continues to be free, and inflation remains a fairy tale.
My favorite news headline today was that Toll "exceeded" estimates. Estimates that had been trimmed over 50% in the past few months. What an acheivement.
Purchases N/A 0
Sales 355,000 1
Net Shares Purchased
(Sold) (355,000) 1
Total Insider Shares Held 43.93M N/A
% Net Shares Purchased
(Sold) (0.8%) N/A
Net Institutional Purchases - Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) 4,320,200
This is about insiders and large shareholders heading for the exits.
Nothing unusual, out of ordinary, beyond the pale, unprofessional,illegal, about this.
The only issue I have is how the public can claims the least bit surprised by what went down today. The information about insider selling, large shareholder selling has and is public knowledge.
"We think the sky may be falling,"
said Mark Fitzgibbon, director of research at Sandler O'Neill & Partners LP. "Credit quality has been deteriorating for two quarters and we think the pace of deterioration will accelerate this quarter."
HSBC warning ominous for U.S. lenders
"the Toll team seems unprofessional to me."
But they make good chocolate chip cookies.....
Thanks for the humor donna. Today I need it.
Itty bitty thing: From my personal depressor agent Ron
The information about insider selling, large shareholder selling has and is public knowledge
So you figure we should stage a comparable televised coference call right after these CEOs leave and highlight the massive insider selling in the HB market so that the information is equally public knowledge?
I don't know what is propping up the sentiment on housing. Do the analysts all own houses and are they afraid that if they are negative they'll lost value on their own house?
Bob Toll is trying to get people to read between the lines, really saying, "I don't know what's going to happen by my instincts say we have a hard time coming but I can't say that outright as that would not be representing stockholder interest which is my mission?"
So, people should stop listening to the words and start examining the situation.
It's over, and will be for several years. We're just polishing brass on the Titanic. It's all going down anyway soon.
calmo:
No need really, just go to YAHOO and look up insider selling for the stock.
Before I buy a stock I always check on insider trading and keep an eye weekly on that indicator.
Saved me many times.
I think the whole CC business is a waste of time, investors should read 10K's and other related financial disclosure informattion before making investments. Who cares what a company President says at a CC.
I'm going to crib from a post I made at the NJREReport earlier.
Down at the bottom of Tolls Q4 info they noted that they expected to sell between 6,300 and 7,300 homes (noted in Bloomberg story) in '07 at an average price of between $660K and $670K (not noted by Bloomberg [at least in update 6]).
In the third quarter their prediction was for more homes 7,000-8,000, but at a lower average price: $635K to $645K.
The question I hoped someone would have asked this afternoon was:
In a softening market, particularly in the Northeast (relatively higher priced homes), what do they know now that makes them think they can raise prices that they didnt know three months ago?
Also, I got this bit of contradiction from the first graphs of the Bloomberg story:
Toll Brothers Inc. said the U.S. housing market may have reached bottom as the largest builder of luxury homes reported the biggest drop in quarterly profit in 16 years.
Net income in the three months ended Oct. 31 fell 44 percent Fiscal 2007 earnings may drop as much as 62 percent,
My question here, if they expect profits to drop more next year why would they call this the bottom?
As noted by another poster (BC Bob) at njrereport, also, if the bottom is in, why are they taking so many land write downs and letting options expire?
Ron, I've also found 10Q's more valuable than conference calls. However, occasionally the tone of voice used or responses of management give a fairly clear read on whether they are truly optimistic or depressed. The integrity and quality of both management and accounting is sometimes highlighted by tough questions.
Rarely are industry or economic forecasts of CEO's of any value except in regards to current industy conditions or as contrary indicators. (An exception is Pierre Lassonde at Newmont.)
CR. Your comments from conference calls are appreciated.
Ok, ron I guess that's what I was trying to say that the CC is a marketing tool (and yes I know where to find insider information).
It is amazing that Credit Suisse's Ivy Zellman can make an appearance and ask some fairly embarrassing questions. Although this doesn't get edited out, I wondered exactly how 'live' and unedited this CC was.
I could manage listening to it up to Zellman's point in the call and side with CR that Bob does sound like someone who is not in command of his company's business. What was Toll Bros' weakest market? Bob needed to shuffle papers for that one and basically was shuffling for most of the questions. As a public relations skit this is not a good flyer.
Finally got to listen to the call, Ivy DESTROYED Bob Toll, listen to his tone before and after she was on the phone he got down right quiet.
I think Bob Toll is very smart (and extremely egotistical), he knows that if he declares a bottom all attention focuses on that. Not on the horrible numbers, not on the writedowns, not on their horrible guidance (and obvious "optimistic" guidance relative to the data). So many people were so busy trying to figure out if it really was a bottom he escaped the call without too many thinking that he just laid a big old poopy on the stock.
Toll's ego is completely wrapped up in this thing, he has had it so good for so long you can tell he isn't used to taking the hard questions regarding the bad times.
The NYSSA conference is tmw and the next day the Q&A sessions should be a lot of fun.
Here is the Toll Brother slideshow for their presentation tmw.
CR,
The 50 defeated GOP congressfolk will not nesc be heading back to the hinterlands, they will prob stay in DC as beltway bandits, thus a net increase in demand for DC RE. That being siad, 50 is not a very big number rel to the market size. On the housing stocks, keep in mind the very fragmented nature of the induet stry. The publically traded firms should have better access to capital than the mom and pops, many of whom are likely to go belly up in the downturn. Thus when the cycle turns, optimistically in mid 08 or 09, they will be able to emerge with a higher market share. Still think it is premature to invest in the group, but when they get down to about 80% of book value they will be interesting to a patent LT investor. I was a big early bull on the group back b4 the bubble started and that was the valuation I was picking the things up for (late 98 early 99) Had 10% of my mutual fund in them (prospectus limit for an industry). Left the job long b4 the cycle ended so cant claim to have sold at the top however.
On the whole, I didn't think this rose to the level of Jeff Skilling calling Richard Grubman an "asshole" for wanting to see Enron's cash-flow statement, which phenonmenon underpins Tanta's CCCCCC* rating for harbingers of doom. We're getting there, though, especially when you combine Ms. Zellman's Kool-aid question with Toll's Claude Raines imitation at the homebuilders conference when Hovanian suggested that gambling might be going on. Still; conferences don't count and failure to answer the question with anything approaching a "fact" may only mean that Toll will be announcing his candidacy in '08 and needs to get some practice in. Come to think of it, maybe that's why he's making a veiled offer to sell some of his "Quick Delivery Homes" to members of the incoming House majority . . . you may think this is ridiculous, but I read the following Toll quote from the call on Mish's site and realized that Bush has said exactly the same thing on more than one occasion:
"Well I referred to somebody else's belief but let us say that I believe, which I am unwilling to make a statement on, to assume your proposition that I believe, which I don't necessarily, but let us assume that I do, your question why wouldn't I buy stock ... "
Unoptimistic Optimism or Faith-Based Homebuilding? I distort; you deride.
*Conference Call Catastrophe Canary in the Coalmine Coefficient
interesting chart -- the future?
http://admin.minyanville.com/assets/File.sg282474.gif
Mish has a good post on Toll today -- Mish's Global Economic Trend Analysis
Tanta, another interesting aspect of that exchange is that Toll disingenuously interpreted Zellman's question about buying back stock as meaning his company doing buybacks. He responded that he would rather hold cash for land purchases.
Her pointed question was in reference to Toll sell his own stock in the Summer of '05. The inference was that if he was so optimistic about '07 why wasn't he buying stock personally. Indeed, insiders have been doing the opposite.
Toll's reputation as a straight shooter is 180 degrees off. He's a hypocrite and a liar.
Zellman's sin is that in a sector so abundantly populated with dishonest people is that she refuses to drink the "kool aid" and presses them to provide verifiable facts.
She has her counterpart in one or two brave White House correspondents who ask hard questions of the Bush administration.
This clown runs a major company. He sounds hell of alot worse than the person who helped me in the dollar store.
How pathetic!
Yeah, number2son, the whole insider selling question followed by corporate buyback answer part was actually right where I lost it. My bullshit detector just screams when stuff like that happens. People are free to think Ivy Zellman is rude if they want to--my own view is that this isn't a tea party, folks, it has consequences--but no one can really say her question was too subtle to be understood properly by anyone who got through Equities 101. You're left with two options: Toll is too dense to follow idiomatic English, or Toll is playing dumb and hoping to distract us all with some bright shiny object. It's like Bush: if you can find comfort in chosing one or the other you're braver than I.
We had Mrs. Zellman in to speak on a panel at our business school. She was smart, outspoken, and very forthcoming about the number of times that she had been threatened with being fired by various CEOs. She was also quite happy that there is now a giant freeking chinese wall protecting (kinda) the research department.
see the David Leonhardt article in today's NYT. if u have to sell today, you're looking at a 10-20% drop in price from last year. he highlights recent auctions in Naples FL, an obviously high-flier, but i think the same is true around the country, based on some recent auctions i've seen in Midwest.
In case anyone's interested Citi just raised it's outlook for the HB industry and key players in particular (as reported via MarketWatch: http://www.marketwatch.com/news/yhoo/story.asp?guid={9D93D6B7-8AC7-4B3C-8323-672086442DA4}&siteid=myyahoo&dist=myyahoo ) !
We really do have a bifurcated view of the housing market & industry and the economy (one could saw chasm but that's alarmist, right ?). Time will tell but it doesn't seem as if anybody could look at the graphs ala CR's work and argue that there's not a bubble to work off.
Julian Robertson is quoted in Herb Greenberg's column as saying this is a n irrational bubble worse than '00.
Sigh. As other commentors it escapes my grasp and comprehension how one could reach the 'bottoming' conclusions. On the other hand in prior years we'd have had nothing but the headlines to go on instead of the analysis and charts herein.
Three cheers for CR and his team.
OOPS. The URL above may point to myYahoo and not do. Try - Citigroup says time to buy builder stocks; raises target prices - MarketWatch
And saw above should be say but it makes a nice Freudian slap.
DaveL, you are the wind beneath my wings. I read "saw chasm" as "sarcasm." (Since it's one of my specialites.) Smack Dr. Freud for me.
Stephen Kim of Citigroup is a despicable shill.
Of course just as many ex-Congressman and Senators will probably be leaving D.C., so it was difficult to understand how this would impact their business in a material way.
But Washington DC is a black hole, what goes in never comes out.
I walked into this one, do not see the outcome. Yesterdays bustling warehouse, once people come and go always. Once I stand here, look at the all kinds of the fun things, which is also fun. Now it is quite such as the winter night in the street, only the lighting of street lights shine ourselves, to the lonely. Just in this situation I will think the hero money, as long as I think it, I will feel I am not lonely, the money is always in my heart I am not of myself only.
I had thought very long has not said the mouth, can only want the psychological words which said to her to swallow from the mouth to the belly, I decide to sell cheap rf gold, in order to with my girlfriend forever in the same place!
Remember that habbo credits we bought, it is used to help us!
So I come back and buy Anarchy credits
I bought some shadow of legend Gold , since at that time, I think I enter the dark screen and lose the way to home.
Rolex Masterpiece watches and replica Rolex Masterpiece watches made with swiss movement ! so cheap and high quality ! accept paypal ,and 14 days money back without reason !