Technically my game plan is to stay firm with this name on any hold over its 50 day moving average ($9) and book more profits at the 200 day moving average ($13) . Any break of $9 and we cut it back severely and exit "flattish" on where we re-entered (remember we booked a quick 19% 1 day profit yesterday). If Obamatism takes hold in the housing sector a lot of these housing stocks could double (not on facts, just hope) quite easily. As I stress with every housing entry, I think most of the benefits of the coming avalanche of government intervention will be for people refinancing, not new homes. People threatened with job losses and stringent credit simply will not be buying homes in large numbers, even at 0% interest rates but I am not going to fight thesis with facts. The stock market is about thesis. So we'll sit in this position, sort of laughing about the absurdity but trying to milk some gains.
For those last three people who still invest based on facts (not thesis), here is some earnings color. Warning, hide the children - but as ugly as it is, Lennar looks like the best thing since sliced bread compared to the Hovnanians (HOV) of the world, so it's all "relative" in the housing world. In a world of putrid, Lennar is a no debt rose.- Lennar Corp (LEN) said on Thursday its quarterly net loss narrowed as it cut land expenditures and tried to clear its backlog of unsold homes, sending shares of the No. 2 U.S. homebuilder up.
- Lennar posted a fourth-quarter net loss of $811.0 million, or $5.12 per diluted share, down from a net loss of $1.3 billion, or $7.92 per diluted share, in the same quarter of 2007. Revenues sank 41 percent to $1.3 billion. (of course the stock is "up" on these excellent results) Reuters Estimates said that on an adjusted basis the company lost 51 cents per share, far less than the loss of $2.03 per share analysts were expecting, but it was not immediately clear if the result was directly comparable with the estimates.
- "Broad-based external pressures continued to negatively impact the housing market during the fourth quarter as rising unemployment, falling home prices, increased foreclosures, tighter credit and volatile equity markets further eroded consumer confidence and depressed home sales," CEO Stuart Miller said in a news release. (but other than that, things are rosy - so say hedge fund computers; and Cramer)
- "As we enter fiscal 2009, we are hopeful the new administration will approve a major stimulus package to stimulate housing demand in order to stabilize housing values, which will reduce foreclosures and stabilize the financial markets, leading to restored consumer confidence," he added. (oh they will, just you wait - the fire hose of our grandchildren's money is going to be directed at making home owners forget all their ills)
- Lennar ended with $1.1 billion in cash and no outstanding debt under its credit facility. (this is the only thing I care about at this point) "We continue to believe Lennar has the requisite liquidity to withstand the downturn," wrote UBS analyst David Goldberg in a note to clients. Goldberg rates Lennar's shares "neutral."
- "In 2009, cash generation will continue to be our top priority. We will convert inventory to cash and reduce both our land purchases and homebuilding starts," he said.
- Lennar said it cut land expenditures by almost 70 percent from the third quarter and its backlog dropped by 60 percent to 1,599 homes.
- New home deliveries fell 36 percent, new orders sank 46 percent and the cancellation rate stood at 32 percent for the quarter. (but don't you worry, 4.5% mortgage rates will put a new home in every American's stocking by Christmas 2009)
Long Lennar in fund and personal account
