Jeffrey, yep I read everything you post here and when I come across your Yahoo posts.
To recap (as I see it): The top manufacturing housing wholesale market share leaders (1998) were: Champion (18.3%), Fleetwood (17.7%), Oakwood (10.2%), Clayton (7.6%), and Cavalier (6.5%) (ref: Manufactured Home Merchandise, June '99, per FLE Annual).
They are all taking a hit. I own FLE which is similar to CHB in that they are both RV mfgers too. Because of CHB, I think FLE is very likely to drop further. But for me, at current prices, a small initial position within a diversified account, is okay. I hold CMH because of its parks, financing and mgmt record. For me, if the entire sector drops further, it would be difficult to pick the best value among the 5. If, as you point out, they move up as well, in tandem, it might not be necessary. I assume the demand for rv's and manufactured homes will continue. I would like to believe that what I read about mfg. housing not being too much affected by interest rate increases (because their financing charges are already 2-3? points higher than home mortgages) is correct.
I think you are very right in being concerned about the consolidation of mfg. housing retail stores. One issue is whether that is a good business strategy. The previous CEO of FLE says it is not. He is upset that FLE is going that route. Secondly, the prices these acquisitors pay very well may be too expensive. This (poor strategy and overpaying) may be characteristic of other industries as well. Wayne Huizunga (spelling?) consolidating car dealerships. Perhaps also dental firms. I'm seeing this I believe with RDO, a consolidator or mom-n-pop ag. and construction equip. firms. Also, as you point out, the funeral industry has grown this way, and the big funeral firms are now paying the piper.
So I am making possibly even a worse mistake by buying Stewart Enterprises (STEI). But here again, for me, it's a big player and the financials look good to me at current prices. Scary though when company itself says their business model is changing. (I'm not so concerned that they say not enough people are dying. That should change. Except of course in California, where the beautiful people think that death is an option. -g-) Not at all comforting though to read this week's Barron's hedge fund manager say that STEI-- already way down to about 6-- is shortable to about $2. |
