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Media Digest 4/9/2009 Reuters, WSJ, NYTimes, FT, Bloomberg

247wallst — Thu, 09 Apr 2009 07:54:24 +0000

According to Reuters, the government’s auto task force will meet with GM (GM) to push ahead its restructuring.

Reuters writes that US banks may still need aid.

Reuters writes that Morgan Stanley’s (MS) Q1 earnings may be hurt by bonds.

Reuters reports that regulators may not want TARP money back soon.

Reuters reports that lower home values are widening budget gaps in many US cities.

Reuters reports that laid-off workers are sometimes finding jobs, but at much lower pay.

Reuters writes that Moody’s (MCO) took away Berkshire Hathaway’s (BRK) Triple-A rating.

Reuters writes that Nintendo will launch Wii Sports in June.

Reuters reports that US airlines may cancel more aircraft orders.

Reuters writes that the collapse of the IBM (IBM) deal may weaken Sun (JAVA) more.

The Wall Street Journal reports that more states plan to raise taxes.

The Wall Street Journal reports the a new suit claims that China dumped steel.

The Wall Street Journal writes that ING will sell $10.6 billion in assets.

The Wall Street Journal reports that Fed officials are split on the best path forward.

The Wall Street Journal reports that questions dog insurers on TARP funding.

The Wall Street Journal writes that Pulte (PHM) will buy Centex (CTX).

The Wall Street Journal reports that Toyota (TM) will put a new executive in charge of North America.

The Wall Street Journal reports that the creator of the Sims game will leave Electronic Arts (ERTS).

The Wall Street Journal reports that Apple (AAPL) is fighting patent suits.

The Wall Street Journal reports that success at Wal-Mart (WMT) and other discounters has helped retail sales and may continue to do so.

The Wall Street Journal writes that there is fighting over SEC plans on short sales.

The Wall Street Journal reports that a Barclays (BCS) sale of iShares to CVC is near.

The Wall Street Journal reports that aid is flowing to US auto parts makers.

The Wall Street Journal reports that Daimler expects a significant loss in Q1.

The Wall Street Journal writes that China has set its plan to develop electric cars.

The Wall Street Journal reports that Acer thinks low cost laptops will help its results.

The New York Times reports that the Administration may suggest that individuals invest in bank bailouts.

The New York Times reports that a federal stress test of 19 banks shows that some may need more money.

The New York Times reports that Japan is unveiling a $154 billion stimulus package.

The FT reports that the number of new mobile subscribers in the world fell in the fourth quarter.

Douglas A. McIntyre

Posted in Press Digest Tagged: AAPL, BCS, BRK, CTX, ERTS, GM, IBM, JAVA, MCO, MS, PHM, TM, WMT

Pulte-Centex Create Major Homebuilder Merger (PHM, CTX, XHB)

247wallst — Wed, 08 Apr 2009 10:16:25 +0000

Pulte Homes, Inc. (NYSE: PHM) is acquiring Centex Corporation (NYSE: CTX) in a stock-for-stock transaction valued at $3.1 billion, including $1.8 billion of net debt. The deal has been unanimously approved by both boards of directors. This is a deal which came out of nowhere, at least as far as the speculation game would have indicated. Centex common holders will receive 0.975 shares of Pulte common stock for each share, and as April 7, 2009 the transaction has a value of $10.50 per Centex share. This represents a pre-dilution premium of 32.6% to the 20-day volume weighted average trading price of Centex’s shares.

The combined company will have the strongest liquidity position among its peer group with more than $3.4 billion of cash as of March 31, 2009. Pulte and Centex ended March with approximately $1.7 billion of cash each. In 2008, Pulte and Centex delivered more than 39,000 closings with combined pro forma revenues of $11.6 billion.

The combined company currently would have an equity market capitalization of $4.1 billion and an enterprise value of $7.2 billion. Pulte shareholders will own approximately 68% of the combined company.

The companies expect to retire in excess of 41 billion in debt, and expect to save $350 million per year in efficiencies.

Centex is indicated over $8.00 after a $7.62 close; 52-week range is $4.91 to $26.09. Pulte is indicated around $10.00 after a $10.77 close; its 452-week range is $6.49 to $17.32. We will likely see some activity early on in the SPDR S&P Hombuilder (NYSE: XHB) ETF.

Depending upon where these two close and depending on how the other stocks react in the sector, this will be the largest US homebuilder by market cap. Desperate times calls for desperate measures.

JON C. OGG

Posted in Housing, Mergers and Buy Outs Tagged: CTX, PHM, XHB

Credit Suisse Starts Homebuilder Coverage (CTX, DHI, KBH, MDC, NVR, HOV, MTH)

247wallst — Tue, 24 Jun 2008 05:50:29 +0000

Credit Suisse has issued a new coverage rating systems for its homebuilder universe. These are some of the calls we saw in the sector:

Centex (NYSE: CTX), DR Horton (NYSE: DHI), and KB Home (NYSE: KBH) were all started with "Outperform" ratings.
MDC Holdings (NYSE: MDC) and NVR (NYSE: NVR) were both started as Neutral.
Hovnanian (NYSE: HOV) and Meritage Homes (NYSE: MTH) were started as "Underperform."

We’ll follow up if we see any of the other calls in the sector out of Credit Suisse.
Jon C. Ogg
June 24, 2008

Did Homebuilders Finally Bottom? (DHI, TOL, LEN, CTX, HOV, BZH, XHB)

247wallst — Tue, 26 Feb 2008 14:06:57 +0000

If you have been watching homebuilders of late, you’ll notice a sharp disconnect between the headlines still coming out and the stock prices of many homebuilders. The move today is partly attributed to Sam Zell’s interview on CNBC saying this spring should mark the bottom in housing. The SPDR S&P Homebuilders (AMEX: XHB) ETF shares are up 6.3% at $22.56 today, and its 52-week low is $15.22.

Keep in mind that Zell has that Gafisa SA (NYSE: GFA) as one of his big plays in Brazil, which we recently noted as one of Jim Cramer’s top picks in Brazil. We have also noted how many of these stocks had doubled from lows. Banc of America recently was the first to upgrade several of these in the homebuilder sector as well.

Today, shares of these are up big, which you can see in comparison to their 52-week lows:

Stock/Symbol       Trade Change 52-wk Range Market Cap
DR Horton (DHI) $16.44 +6.06% $9.78-27.26 $5.18B
Toll Bros (TOL)    $23.24 +6.02% $15.49-32.00 $3.68B
Lennar (LEN)       $20.40 +8.63% $11.98-51.43 $3.26B
Centex (CTX)       $26.10 +9.53% $17.77-49.85 $3.19B
Hovnanian (HOV) $10.91 +10.20% $4.25-33.32 $679.76M
Beazer (BZH)       $8.74    +12.48% $4.53-42.42 $342.68M

We have noted over and over that this sector would bottom and start to recover long before the news starts to look like anything resembling good news. That may or may not be now, but when you see an ETF recover 50% from lows you have to wonder how much worse things would have to get for that recovery to not at least partially hold up. At one point, things were getting so bad we even asked "which would hit zero first?"

We still expect more bad headlines with no end in clear site. But a 50% recovery in an ETF that measures a sector has to be telling you something, even if there will be more bad days on and off and even as more headlines still look bad.

Jon C. Ogg
February 26, 2008

Which Homebuilder Stock Goes To Zero First? (XHB, DHI, TOL, LEN, PHM, CTX, NVR, KBH, MDC, RYL, HOV, BZH)

247wallst — Tue, 27 Nov 2007 15:45:24 +0000

Everyone keeps predicting one or more of the large US Homebuilders is going to implode because of their overbuilding and inability to sell new units at their old highly profitable margins. Most of these have large land bank losses from property options being written off. inventories are through the roof, no pun intended. Well, you’ve seen and heard the news.

What we wanted to do was show a list of the old major homebuilders to show how the stocks have sold off over the last year and even how low the market caps have become in the sector. Dubai has signaled it wants to buy into a homebuilder, and that was before Abu Dhabi injected $7.5 Billion into Citigroup.

Measuring stock price alone is no way to judge, but looking at the sell-offs from the recent highs may be a judge. Some are down more than 80% from their 52-week highs.

Tick PRICE       CHANGE          $52-WEEK    MKT-CAP
DHI $10.23 (-$0.35; -3.31%) $10.46-31.13    $3.22B
TOL $18.12 (-$0.01; -0.06%) $18.12-35.64    $2.84B
LEN $14.08 (-$0.42; -2.90%) $14.50-56.54    $2.26B
PHM $8.92 (-$0.24; -2.62%) $9.00-35.56       $2.28B
CTX $17.93 (-$0.45; -2.45%) $18.34-58.42    $2.18B
NVR $442.59 (+$8.59; +1.98%) $398.96-851.96 $2.27B
KBH $18.65 (-$1.00; -5.09%) $19.61-56.08    $1.92B
MDC $32.15 (-$0.40; -1.23%) $32.49-60.34    $1.47B
RYL $19.76 (-$0.26; -1.30%) $19.97-60.13    $831.58M
HOV $6.95    (+0.02; +0.29%) $6.92-38.66       $432.32M
BZH $7.12    (+0.15; -2.06%)    $7.06-48.60       $279.16M

We aren’t going to make a determination yet as to which ones will live and which ones will bite the dust. Unfortunately you can’t even trust the balance sheets right now because there is simply no way to calculate the off-book transactions, the value writedowns that each will fess up to, and how many of these homes that were juiced-up and sold above market with rebates and incentives that some of the builders will ultimately have to take back at some point in the future.

At least one or some will likely fail. History would dictate that some cannot survive the malaise if it continues at this rate. Ultimately, some will thrive after this dust storm settles. But "ultimately" can be a long ways off.

If you noticed the news this morning you saw a 4.5% decrease in housing prices in Q3 2007 over Q3 2006, and that was after a 2.2% decrease in Q2. There is no price rebound expected in 2008, and foreclosures are expected to rise as well.

The SPDR S&P Homebuilders ETF (AMEX:XHB) shares are down 0.8% at $17.05 late in the day.

DR Horton (DHI), Toll Brothers (TOL), Lennar (LEN),Pulte (PHM), Centex (CTX), NVR Inc. (NVR), MDC Holdings (MDC), Ryland (RYL), Hovnanian (HOV), Beazer (BZH)……

Jon C. Ogg
November 27, 2008

24/7 Wall St. has an open email distribution list with other similar briefs and stories where we summarize and preview data for those interested. It is usually sent out two to three times per week.

Home & Lending Stocks Continue To Implode (FNM, FRE, C, WM, SOV, HD, LEN, CTX)

247wallst — Fri, 19 Oct 2007 11:27:22 +0000

After reviewing the 52-week lows today, it was almost the same old trend we have been seeing day in and day out…. Lenders… Banks… Homes… and Consumer…What is obvious is that the FOMC can continue to cut rates, but the consumer is stretched and the lenders don’t want to loan more funds. Hell, the borrowers might not even want to borrow either.

Freddie Mac (FRE) is hitting this list today and that is actually a low back to 2004. Fannie Mae has not hit the implode list, even after sending out payment from a class action last night. These might not all be at 52-week lows now, but lending stocks that hot new 52-week lows today are:

Lenders: (BKUNA) Bankunited Financial….habitual; (C) Citigroup; (CFR) Cullen Frost Bankers;
(CMA) Comerica; (FAF) First American; Indymac (IMB); (RF) Regions Financial; (SNV) Synovus Financial; (SOV) Sovereign; (VLY) Valley National Bancorp; (WM) Washington Mutual; (ZION) Zions Bancorp

Loan insurers: (PMI) PMI Group… not a lender, but the mortgage insurer we all hate; (RDN) Radian… financial enhancements to mortgage lenders; (TGIC) Triad Guaranty, same business as PMI.

Builders & Housing-related: Beacon Roofing (BECN), Brookfield Homes (BHS), Builders Firstsource (BLDR), Building Materials (BLG), Centex (CTX), Home Depot (HD), Lennar (LEN), Masco (MAS), M D C Holdings (MDC), Move (MOVE), Meritage Homes (MTH), Palm Harbor (PHHM)….

The earnings out of financial stocks are of course an issue, but interestingly enough yesterday Fox Business News had an exclusive interview with Warren Buffett. His comments were not any great hope that the worst has been seen in housing, and that those stocks still were not yet cheap. Take a look at Buffett’s comments that he gave exclusively to Fox Business News:

“I didn’t buy a share. I look at them. I look attheir debt, their equities. I look at everything. I’m waiting untilthey’re under priced. That’s what I look for with any security. And,I don’t think they’re undervalued. Starting 30 minutes, ending 18months ago – that year – we probably had more home builders offer toBerkshire where the managements wanted to see the business that I’veever seen in any industry. A significant percentage of thepublicly-owned home builders, when their stock was flying high andtheir management was talking bullishly, were trying to sell theircompanies. Apparently they knew what was going on or likely to go on.Though, I don’t think they saw it coming as extensively as it did.”

Jon C. Ogg
October 19, 2007

UBS Starts Coverage of Homebuilders (BZH, CTX, DHI, HOV, KBH, MTH, PHM, RYL, SPF, LEN, LOW)

247wallst — Tue, 25 Sep 2007 06:59:33 +0000

Lennar posted earnings and as expected these were just ugly. The loss was $3.25 per share after charges, although this includes charges of $3.33 per share. Revenues were $2.34 Billion. Lennar’s home sale revenue fell 44% to $2.2 billion. Cancellation rate was 32%; New orders fell 48% to 5,804 homes. And if this wasn’t foreseeable, the company will be having more job cuts in the coming quarter. Lennar shares are indicated down $1.30 to 41.70 at what will be another set of 52-week lows.

UBS has initiated coverage of homebuilders:

Beazer (BZH) started as Sell;
Centex (CTX) started as Buy;
D.R.Horton (DHI) started as Sell;
Hovnanian (HOV) started as Neutral;
KB Home (KBH) started as Buy;
Lennar started as Sell;
Meritage (MTH) started as Neutral;
Pulte (PHM) started as Sell;
Ryland (RYL) started as Neutral;
Standard Pacific (SPF) started as Sell.

Lowe’s (LOW) earnings warning last night is also pulling the related and tertiary sector down.

Jon C. Ogg
September 25, 2007

Mortgage Madness Stocks Win The Day’s Top Performers (MTG, CFC, C, BSC, KBH, CTX, C, GS, BX, MBI, TMA, BZH, WM, LEH, HOV)

247wallst — Tue, 18 Sep 2007 15:16:15 +0000

We reviewed our different portfolios of key stocks to see which ones performed the best today, and it wasn’t just the financials as a general class. At the end of the day, Jim Cramer’s old list of stocks from his "Mortgage Madness Portfolio" took the cake.

This is the list: MGIC Investment (MTG), Countrywide (CFC), Bear Stearns (BSC), KB Home (KBH), Centex (CTX), Citigroup (C), Goldman Sachs (GS), Blackstone (BX), MBIA (MBI), Thornburg (TMA), Beazer (BZH), and Washington Mutual (WM).

We ran the screen right before the close, but take a look at how this portfolio did after the 50/50 dual rate cut from the FOMC today (Ticker; Price; Changes ($,%); 52-week range):

MTG $33.55 +$2.75 (+8.93%) $21.00-70.10
CFC $19.91 +$0.64 (+3.32%) $15.00-45.26
BSC $119.87 +$4.49 (+3.89%) $99.75-$172.61
KBH $29.27 +$1.15 (+4.09%) $25.95-$56.08
CTX $29.22 +$1.38 (+4.96%) $25.59-58.42
C $48.33 +$2.30 (+5.00%) $44.66-57.00
GS $200.53 +$12.92 (+6.89%) $157.38 – 233.97
BX $24.36 +$0.71 (+3.01%) $21.30 – 38.00
MBI $61.95 +$4.47 (+7.78%) $48.95 – 76.02
TMA $13.50 +$0.30 (+2.27%) $7.49 – 28.40
BZH $11.37 +$1.90 (20.06%) $8.10 – 48.60
WM $37.70 +$1.74 (4.84%) $31.27 – 46.38

If you added in Hovnanian (HOV) for it saving itself with a homebuilder firesale last weekend and add in Lehman Brothers(LEH) because of its better than expected (and far less bad) earnings from this morning, then this entire portfolio would be the hottest smoking portfolio.

This blew past the tech stocks from Cramer’s old "NEW FOUR HORSEMEN OF TECH" and it blew well past our list of defensive stocks we gave for crummy markets.

Jon C. Ogg
September 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Many Housing Stocks Still Hitting Lows (CTX, DHI, KBH, LEN, RYL, MHO, BECN, BLDR, MAS, XHB)

247wallst — Tue, 11 Sep 2007 11:45:15 +0000

Stock Tickers: CTX, DHI, KBH, LEN, RYL, MHO, BECN, BLDR, MAS, XHB

After a mid-day review of 52-week lows, there was one obvious group that makes this list now more frequently than it does not: HOMEBUILDERS. Related companies are also on the list of usual suspects as well.

**denotes hit intraday 52-week lows but may be above now

Centex (CTX)             $25.88; prior low $26.03
DR Horton (DHI)       $13.58; prior low $13.61
KB Home (KBH)       $26.43; prior low $26.55
**Lennar (LEN)       $25.61; 25.50 prior low (today low $25.34)
**Ryland (RYL)          $25.19; prior low 24.92 (today low $24.90)
**M I Homes (MHO) $14.82; prior low 414.81 (today low $14.65)

Those with related activities that saw intra-day lows under the prior 52-week low ar as follows: Beacon Roofing Supply (BECN), Builders Firstsource (BLDR), and Masco (MAS).

About the only good news is that the SPDR S&P Homebuilders (AMEX:XHB) shares are actually UP on the day now with the broader markets. XHB shares are up 0.8% at $22.81, and its 52-week range is $22.59 to $40.03. This ETF is being led by some of the large suppliers that serve the industry rather than by the homebuilder components themselves. Toll Brothers (TOL) and Pulte Homes (PHM) are actually up on the day.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

The 52-Week Low Club

247wallst — Tue, 28 Aug 2007 15:02:07 +0000

Neurochem (NRMX) Continues to race for the bottom. On Monday, the company said its Alzheimer’s disease treatment candidate, Alzhemed, failed a late-stage trial. The NRMX says it has 15 to 18 months of cash left. Maybe. Drops to $2.16 from 52-week high of $26.51.

Conexant (CNXT) Israel’s Orckit Communications wins arbitration and CNXT has to pay $12 million. Does not seem like a lot but stock drops to $1.06 from 52-week high of $2.36.

Tenet Healthcare (THC) Credit Suisse analyst launched coverage on the company with an "Underperform" rating. Down to $3.29 from 52-week high of $8.69.

Lennar (LEN) Home builder. Enough said. Down to $27.26 from 52-week high of $56.54.

Centex (CTX) Home builder. Ditto. Down to $28.13 from 52-week high of $58.42.

Horton (DHI) Another home builder. Drops to $14.40 from 52-week high of $31.13.

Leapfrog (LF) Bad quarter recently and toy companies are not all the rage right now. Down to $6.91 from 52-week high of $11.56.

Douglas A. McIntyre