GOLDMAN SACHS SAYS BUY THE HOMEBUILDERS INTO EARNINGS
16 October 2009 by TPC
6 Comments
Goldman Sachs is recommending that investors buy the homebuilders into their earnings. They list a number of reasons for the trade:
- Home prices will remain stable as the foreclosures remain orderly, government stimulus continues to support the market.
- Earnings are stabilizing, sales trends are improving and firms are becoming profitable again.
- The Federal Tax Credit is likely to get extended into the first quarter of next year.
How to play it?
Goldman likes the homebuilders with the strongest balance sheets, cost controls, low potential writedowns and low risk of negative surprise:
The firms that fall into this category are DR Horton (DHI), MDC, Toll Brothers and Meritage (MTH).
* Special thanks to reader Speedy who helped contribute to this piece.
More on this topic
(What's this?)
The Secret to Profiting from Earnings Reports: Buy High… Sell Higher
(Investment U, 10/21/09)
Guest Post: More Goldman Lies
(naked capitalism, 10/15/09)
Ratigan on Goldman Sachs: "Legalized Theft"
(Wealth Daily, 10/19/09)
Mirabile Dictu! Goldman Lost Money Only One Day in Last Quarter
(naked capitalism, 11/5/09)
How much do you want to bet that Goldman Sachs is short DR Horton (DHI), MDC, Toll Brothers and Meritage (MTH)?
I have a large stop buy order of XHB. Check local (Socal)RE market it is beyond crazy. Crazier than anything I saw in 2004, 2005, 2006. Decent homes sold over list price in just one or two days.
We really learnt a lot from Chinese. Chinese RE market crashed at least 3 times in last 6 years,(20-30% down) over a few months. But government managed to reflate market every time. The properties that I know are at least 500% more expensive over these years.
So betting on government’ inability to inflate is really a risky Biz. I would never do that again.
John Doodle Reply:
October 16th, 2009 at 10:26 PM
Sure, we live in next door Nevada, and we are trying to get another one of these deals too; the last investment house we bought in May was flipped to a buyer in early september for 15% gain, better than the stock market. Of course you need to pay cash for a quick deal coz the banks are just too scared lending. The buyer who bought from us paid for the downpayment with just 3K cash plus the $8k government credit; they probably couldn’t afford a mortage any other way. I know of folks being asked by their relatives from Brazil wanting to get into one of these deals too, plenty of spare cash to launder there, probably dropped on them by Bernanke. Tomorrow there’s an election, Obama would win again. Only the taxpayers of next generation would be paying for his largesse, but who cares, if u can’t beat them…
The Toll Brothers (literally, Joe and Bob, or whomever) have been selling their own stock like it’s going out of style.
KB Home is under investigation by the Securities and Exchange Commission “regarding possible accounting and disclosure issues.”
…sounds like they were cut from the same bolt of cloth as Goldman Sachs.
And while I’m on the subject of GS (tin foil pressed firmly against balding pate), last week, they came out and pumped the big banks – especially Wells Fargo – and the market went up 1.5% (WF was up over 5%, IIRC)…while on the same day, a bank analyst put out a note saying that WF was a very risky play. Fast forward to the last two days, and I can’t help but think that GS was selling into the rally that they had created (knowing what they knew).
And now, they are doing it with these cretins from the homebuilding industry.
Sell early and often if you own these stocks, and if they turn bearish on one of your holdings, hang on to it with all that you’ve got.
This seems to be in very stark contrast to another report by GS only two weks ago, in which the headline was:
GOLDMAN SEES HOUSE PRICES FALLING ANOTHER 14%
Goldman Sachs says home prices are going to fall another 14% to their 2002 lows and could be flat to down for years to come:
Fact is goldman sachs makes money by misleading the investing public.
If you want more details check out on by search google for [goldman
sachs ponzi matt tabbi]
99% don’t have any idea and will continue to get suckered by these
schemes.
The key is do your own research or get get reliable top grade analysts
to give you the right kind of Investment analysis/opportunities
at the the right time, at the right price that can make you money
- Not goldman sachs.
MARKET QUOTES
THIS WEEKS MOST POPULAR STORIES
MARKET NEWS
© 2009 pragcap.com · Login.
Home · Advertise · Contact us · Disclaimer ·