Monday, April 5, 2010

Bookkeeping: Restarting Lennar (LEN)

Lennar is a comany that heavily lobbies the government and receives massive taxpayer largesse.  [Mar 18, 2010: Large Public Homebuilders Benefit from Tax Aid - Lobbyists Win Again]   They also speculate in distressed debt.

  • Lennar Corp., the third-largest U.S. homebuilder, is investing in failed bank loans and distressed real estate assets to boost revenue as demand for new houses shows few signs of revival.

I believe they also have a core business that builds homes, but that is secondary in Cramerica.  Lobbying #1, Speculating #2, primary business #3.  Yes, in that order... buying Lennar is now almost like buying an investment bank - if only they had access to the discount window.

More importantly I said last year when I sat in awe that people were shocked (just shocked) that more homes are sold in spring and summer than other periods of the year, that I'd take advantage of that surprise in 2010.  With today's pending home sales "shocking" market participants (believe it or not, it's spring and this figure is trending up!) you can see the pattern already forming. 

I'll begin a 3% allocation into Lennar (LEN) around $17.50 as its come back to fill a gap from a "great earnings report" a week and a half ago.

It's been about 11 months since we last invested in this premier government lobbyer (yes that's how you spell it); it's good to be back "home". 

[Jun 23, 2009: WSJ - Land Deals Help Home Builders Stay Alive (Not to Mention Tax Rule Changes, and Government Largesse]
[Jul 5, 2008: Washington Post - Vital Part of Housing Bill is Brainchild of Banks]

Long Lennar in fund; no personal position


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