"Altruistica": Seeking a return to full financial disclosure and regulatory oversight. A financial market analysis blog for "entertainment purposes" only by an experienced CFA seeking new hedge fund engagements for investment writing and analysis. The author has experience investing internationally, running a hedge fund, making angel investments, and helping launch five startup companies. Investors should do their own due diligence.

05 December 2006

SELL Toll Brothers- "Creamer on CNBS"

Serial Pumper Cramer Says SELL Toll Brothers

Toll Brothers-TOL CEO says he didn't mean to project optimism on the market

TOL CEO says some markets are seeing pent up demand, and that Reno, Las Vegas and Phoenix are among the worst markets. TOL's CFO added that margins are being "narrowed" by cancellations.

Toll Brothers-TOL discusses stock buybacks during Q4 conference call

During the company's Q4 conference call, TOL chairman and CEO Robert Toll was asked why the company did not buy back more stock. Mr. Toll answered "I believe I can make more money buying land and expanding the business then I could buying the stock."

Toll Brothers-TOL discusses jump in cancellation rates during Q4 conference call

During the company's Q4 conference call, TOL management said it "precipitated [a jump in cancellation rates] by shaking the tree," and that it was a large reason there was a large jump in the number. They added that over the last couple of weeks, the shakeout added at least 20% to the total cancellation numbers.

Yeah, we have control over these markets-HAHAHHHAHAHA

Forbes Notes:

"Some analysts predict that homebuilders are due for even more disappointing news in the near future. “I think we have only seen the beginning of the pains here for these guys,” said JMP Securities Equity Research Analyst Alex Barron. Barron argues that homebuilders bought up land at high prices just a few years ago, purchases that will now be coming back to haunt them. “You will start to see lower home prices and higher costs,” he said.

More broadly, Barron doesn’t think we have hit bottom yet in the slumping housing market. There is a glut of housing, he said, an excessive inventory that still must be worked through. “We will hit the bottom a year from now,” he said.

In order to move the inventory, Barron argued that homebuilders will have to lower prices by 15% or more, a move that will only further squeeze their profit margins. Raymond James & Associates Research Equity Analyst Rick Murray agreed that the market hasn’t yet bottomed out. “Recent commentary suggesting that we are at the bottom, at this point, is premature,” he said. Murray likewise points to excessive inventory as the problem. “There are 1.5 million excess inventory units that need to be cleared out before we return to normal,” he said. “That will take a more extended period of time, maybe two to three years or even longer.”


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