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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (8787)	10/27/1999 10:16:00 PM
From: Jurgis Bekepuris	Respond to of 78666

Sam, >Any reason the homebuilders selling < book value >with mid-single-digit PEs? I don't follow the industry, but the reasons are "usual suspects": rates rising = home buying slump = overbuilding = real-estate crash = home builders Chapter 11 = catastrophe. Add additional - different - scenario of economic slowdown = home buying slump ... and you get the picture. Add the point that some of homebuilders are vertically integrated with building supplies and mortgage businesses, and the picture is even worse. If you believe that the fears are overblown, or that valuations are too low in spite of fears, buy the leader with low debt/equity, cause debt may break the camel's back. See semi-equip crash last year, but don't expect as fast recovery as semi-equips. For less sanguine scenario, see HDD industry. ;-) From the first glance (2 minute review) CTX is the company to buy. Jurgis

To: Sam Citron who wrote (8787)	10/27/1999 10:28:00 PM
From: Q.	Respond to of 78666

re. homebuilders: book value typically consists of land, thus, when these stocks sell below book, as they are now, price/book is something worth your attention. At least that's what an analyst for the sector said on Bloomberg yesterday -- the audio is there to listen on a Bloomberg terminal if you bring up the news on CTX for example. The guy emphasized that he thought they couldn't fall much farther. I bought a little CTX today, adding to the LEN, KBH, CROS, and DHI that I accumulated too early in this sector's rout. here's a table of current valuations that I made, in order of descending market cap: stock p/b CTX 1.13 KBH 1.24 PHM 0.79 DHI 0.93 LEN 0.88 TOL 0.99 UH 0.66 CROS 1.02 If you wanted just one stock, and you want liquidity, CTX would probably be the choice.