BloggingStocks

Crooks and mortgages

Peter Cohan — 2008-08-19T12:52:00+00:00

Filed under: Consumer experience, Scandals, Centex Corp (CTX), Housing

Recent reports reveal a surprising amount of criminal activity in the mortgage business. This is particularly true in states whose names end in the letter A, such as Florida and Nevada. Two particular forms of illegal behavior are the licensing of mortgage brokers with criminal records and homebuilders' use of bribes -- or 'incentives' -- to encourage people to buy over-priced houses without disclosing them to lenders as required by law. Think I'm kidding?

DSNews reports that last week, Florida's mortgage commissioner resigned after it was revealed that he granted mortgage brokerage licenses to people with criminal records. Specifically, DSNews wrote that Don Saxon, who had been Chairman of the Office of Financial Regulation (OFR) had "allowed more than 10,000 people with criminal histories - including bank robbers, racketeers, defrauders, embezzlers, identity thieves, and tax evaders, among others - to work in Florida's mortgage lending industry between 2000 and 2007. These convicted felons had expropriated more than $85 million from lenders and homeowners during that time."

Meanwhile, things were not much more legal in Nevada. That's where the Wall Street Journal reports that the Las Vegas, NV branch of home builder Centex (NYSE: CTX) paid off the credit cards and mortgages of potential borrowers to entice people to buy homes priced from $350,000 to $550,000. The FBI is investigating allegations that Centex did not always disclose these 'incentives' to lenders as required by law.

In some cases, developers gave big commissions to real-estate agents who then gave that money back to the buyer. The goal was to get people to pay the inflated prices for developers' houses without letting the bank in on the 'incentives.'

I suspect that this is just the tip of the iceberg. It makes you wonder whether the government regulators who were supposed to be preventing this behavior were also getting a piece of the action.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Centex securities.

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Toll Brothers issues preliminary results -- should you stay away from the stock?

Steven Mallas — 2008-08-14T08:41:00+00:00

Filed under: Centex Corp (CTX), Lennar Corp'A' (LEN), Toll Brothers (TOL)

Are you waiting for the malaise in the housing market to finally lift? Of course you are, who isn't? I can't wait for the day when headline news suddenly turns unambiguously positive. And I can't wait for the day when the market as a whole decides to anticipate it. For now, though, we've still got sour data to contend with. According to this article, famous luxury home-builder Toll Brothers (NYSE: TOL), whose competitors include Centex (NYSE: CTX) and Lennar (NYSE: LEN), reported preliminary results for the third quarter on Wednesday that showed a big decrease in home-building revenues. They decreased 34%, coming in at roughly $796 million. Seems par for the course, all things considered.

But there are more declines. Backlog orders decreased over 50%, and net signed contracts took a dive of 35% (both of these metrics are in dollar terms). The company is also issuing write-downs that will fall somewhere between $100 million and $200 million. Depressing stats, but according to the company press release, CEO Robert I. Toll believes that there is pent-up demand lurking out there in the marketplace for homes and he used the fact that total cancellations were down during the quarter as a tool for positive spin. Plus, the home-building revenue number did, in fact, beat estimates, according to Reuters. Does this make me want to run out and buy the stock?

No. Even though the stock has been strong in the last month, and even though it was up nearly 1% at the end of the trading session on Wednesday (a pretty nice showing on an otherwise overall downer of a day), I don't think I'm ready to initiate a position in Toll Brothers. I'd have to see a significant pullback in this one before my interest becomes piqued (some better economic news wouldn't hurt, either).

Disclosure: I don't own any company mentioned; positions can change at any time.

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Cramer on BloggingStocks: Horton doesn't get it

Jim Cramer — 2008-08-06T09:09:00+00:00

Filed under: Market matters, Centex Corp (CTX), D.R.Horton (DHI), Freep't McMoRan Copper (FCX), Stocks to Buy, Stocks to Sell, Housing, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says they should be punished for trying an end run on taxpayers.

Love Centex (NYSE: CTX) (Cramer's Take), sell Horton (NYSE: DHI) (Cramer's Take)? That's how I feel after reading Horton's pathetic plea to bring back down-payment assistance for this industry, which remains unpunished for all it did to foment the housing crisis.

Yesterday, in one of our "Wall Street Confidential" series, I opined that Centex was shaping up to be one of the better builders after making so many right moves in the last year to preserve capital. I didn't care for industry leader D.R. Horton, though.

And that was before I read the outrageous comments from Horton CEO Don Tomnitz in Market Watch yesterday, where he decried that the new housing law didn't include more down-payment assistance loans from the FHA. These seller assistance loans plied basically, by the homebuilders that allow homebuyers to use a back door to FHA loans, have been defaulting at very high rates. The Congress, in an actual dollop of wisdom, scrapped them and instead gave people a tax credit of $7,500 to buy a new house, not bad considering that houses have retreated in value to the point that even though you need to put down more money as a percentage basis, as an absolute basis there's some affordability. This kind of loan is precisely what got us in trouble, an affordable loan that people ultimately couldn't afford that just helped Horton dump properties.

Centex, on the other hand, a more conservative company than Horton, and hence a more likely survivor, agrees that this kind of financing is bad in the long run because it is being given to unqualified people who then can't pay.

As we probe and (I believe) hold the bottom for the financials reached July 15, the congressional legislation is a key aspect of the returning to sanity in the housing market. But sanity includes some punishment for those who didn't play by the rules, meaning those who abetted the process of giving loans to people to get homes off the books and then hooking in the taxpayer, through the FHA, to do so. We need some homebuilders to merge or go out of business to continue to shrink the new supply to get price stability.

Horton's outrageous comments show we aren't there yet. Still too many companies in that industry depending upon you and me to stay in business, not their own business smarts and balance sheets.

The shame from this industry's participants and their unwillingness to admit that they had anything to do with the problems is just outrageous.

It's good that the legislation gave them no handouts despite ample attempts from them to get them.

Maybe there's hope for the consolidation and bankruptcies and rationalities after all, because only a desperate company would still call for such insanely imprudent plans like down-payment assistance.

Random musings: Yesterday I wrote that Freeport-McMoRan (NYSE: FCX) (Cramer's Take) was being destroyed by quant funds and the idea that it could lose 25% in a week was unfathomable. Today, Lonmin gets a bid from Xstrata, a reminder that mineral companies may have no value when it comes to the quants but tremendous value when it comes to companies that have to deliver ore to real customers who are not watching the S&P 500 futures and the stop losses and the 200-day charts.

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RELATED LINKS:
D.R. Horton Narrows Loss, but Clearly Weak
U.S. Housing Prices: When's the Bottom?
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Freeport-McMoRan.

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Eddie Lampert buys into KB Home (KBH), Centex (CTX)

Brent Archer — 2008-06-12T14:40:00+00:00

Filed under: Major movement, Good news, Industry, Centex Corp (CTX), KB HOME (KBH), Options, Technical Analysis, Housing

KB Home (NYSE: KBH) shares are trading higher after a report that hedge fund manager Edward Lampert has bought "small stakes" in homebuilders Centex (NYSE: CTX) and KBH, thinking that the housing market may be poised for a recovery. Investors are taking this news as a good sign for KBH. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on KBH.

After hitting a one-year high of $44.51 last June, the stock hit a one-year low of $15.76 in January. KBH opened this morning at $18.21. So far today the stock has hit a low of $18.15 and a high of $19.07. As of 12:00, KBH is trading at $18.87, up 1.00 (5.6%). The chart for KBH looks bearish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just five weeks as long as KBH is above $15 at July expiration. KBH would have to fall by more than 20% before we would start to lose money. Learn more about this type of trade here.

KBH hasn't been below $15 at all in the past year and has shown support around $17.50 recently. This trade could be risky if the financial sector continues to tumble or if the Fed makes its first interest rate hike in a while, but even if that happens, this position could be protected by the support the stock might find around $16 where it put in a bottom in January.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in KBH.

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Earnings highlights: Countrywide, Visa, MasterCard, KBR, Office Depot and others

Trey Thoelcke — 2008-05-03T15:40:00+00:00

Filed under: Earnings reports, Avon Products (AVP), Centex Corp (CTX), CIGNA Corp (CI), MasterCard Inc'A' (MA), Countrywide Financial (CFC), Office Depot (ODP)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

Allegiant Travel Co. (NASDAQ: ALGT) beat estimates with soaring Q1 revenues, bucking the airline trend.
Apache Corp. (NYSE: APA) Q1 profits doubled but fell short of expectations.
Avon Products Inc. (NYSE: AVP) posted solid Q1 results despite negative operational cash flow.
Centex Corp. (NYSE: CTX) posted a Q4 loss well below analyst estimates.
Cigna Corp. (NYSE: CI) profits plunged in the first quarter on litigation charges.
Countrywide Financial Corp. (NYSE: CFC) posted another big loss, way off estimates of a small profit.
Deutsche Bank AG (NYSE: DB) posted its first quarterly loss since 2003 on write-downs.
Gardner Denver Inc. (NYSE: GDI) beat Q1 expectations and raised its outlook for the year.
International Paper Co. (NYSE: IP) fell short of Wall Street's Q1 earnings estimates.
Jacobs Engineering Group Inc. (NYSE: JEC) beat Q1 estimates and offered fully-year guidance.
KBR Inc. (NYSE: KBR) Q1 profit more than doubled on arbitration benefit.
MasterCard Inc. (NYSE: MA) topped analysts' expectations as Q1 profits more than doubled.
Office Depot Inc. (NYSE: ODP) Q1 profits tumbled 55% but still beat analysts' estimates.

Parker Hannifin Corp. (NYSE: PH) beat Q3 expectations due to growth in key markets.
Savvis Inc. (NASDAQ: SVVS) reported narrower-than-expected losses and lowered its 2008 outlook.
Thomas Weisel Partners Group Inc. (NASDAQ: TWPG) swung to a Q1 loss on fewer M&A transactions.
Tyco International Ltd. (NYSE: TYC) narrower profits beat expectations, and it lifted its outlook.
Visa Inc. (NYSE: V) posted unimpressive results for its first quarterly report since its IPO.
Wright Medical Group Inc. (NASDAQ: WMGI) beat Q1 estimates on growth of all major product lines.

Also, Jim Cramer lauds Procter & Gamble Co. (NYSE: PG) for its success in these tough times and Colgate-Palmolive Co. (NYSE: CL) for bouncing back after taking a hit. And Time Warner Inc. (NYSE: TWX) investors may have been looking for more than they got in the quarterly report.

Upcoming results to watch for include Anadarko Petroleum (NYSE: APC), Cisco Systems (NASDAQ: CSCO), Fannie Mae (NYSE: FNM), Molson Coors (NYSE: TAP), Walt Disney Company (NYSE: DIS), and American International Group (NYSE: AIG).

Visit AOL Money & Finance for more earnings coverage.

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Centex rises despite huge EPS miss

Brent Archer — 2008-05-01T14:35:00+00:00

Filed under: Major movement, Earnings reports, Good news, Industry, Centex Corp (CTX), Options, Technical Analysis, Housing

Centex Corp. (NYSE: CTX) shares opened lower today, but have risen throughout the day, even after the company posted a fourth-quarter loss of $911 million, or $7.34 per share, well below analyst estimates of a $2.43 per-share loss. Revenue tumbled 37% for the quarter to $2.31 billion, as CTX cut its average selling price 15% to help build up sales. Investors must believe that the worst is over for CTX. If you think this stock won't be falling too far in the coming months, then it could be a good time to look at a bullish hedged play on CTX.

After hitting a one-year high of $49.85 last May, the stock hit a one-year low of $17.77 in November. This morning, CTX opened at $20.02. So far today the stock has hit a low of $19.79 and a high of $22.25. As of 12:15, CTX is trading at $21.92, down 1.10 (-5.3%). The chart for CTX looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.

For a bearish hedged play on this stock, I would consider a June bull-put credit spread below the $17.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in two months as long as CTX is above $17.50 at June expiration. Centex would have to fall by more than 20% before we would start to lose money. Learn more about this type of trade here.

CTX hasn't been above $17.50 at all in the past year and has shown support around $19.50 recently. This trade could be risky if the US housing market gets even worse, but even if that happens, this stock might even rise, judging by today's action.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CTX.

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Centex (CTX) tumbles on housing data

Brent Archer — 2008-04-08T15:32:00+00:00

Filed under: Major movement, Bad news, Industry, Centex Corp (CTX), Options, Technical Analysis, Economic data, Housing

Centex Corporation (NYSE: CTX) stock is falling today along with other homebuilders after the National Association of Realtors said February pending sales of existing homes fell 2% from January. Existing home sales are considered a good indicator of the overall housing market, which means more trouble could be ahead for CTX. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CTX.

After hitting a one-year high of $49.85 in May, the stock hit a one-year low of $17.77 in November. This morning, CTX opened at $25.90. So far today the stock has hit a low of $25.00 and a high of $26.09. As of 1:00, CTX is trading at $25.01, down $1.31 (-5.0%). The chart for CTX looks bullish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.

For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 12.4% return in six weeks as long as CTX is below $30 at May expiration. Centex would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.

CTX hasn't been above $30 since August and has shown resistance around $27 recently. This position could be risky if the US economy turns around quickly, but even if that happens, this trade could be protected by resistance CTX might find from its 200 day movning average, which is around $28 and falling.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CTX.

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How to play the financial sector right now

Timothy Sykes — 2008-02-11T12:38:00+00:00

Filed under: Citigroup Inc. (C), JPMorgan Chase (JPM), American Express (AXP), Bank of America (BAC), Centex Corp (CTX), Merrill Lynch (MER), MasterCard Inc'A' (MA), Federal Natl Mtge (FNM), Goldman Sachs Group (GS), Morgan Stanley (MS), Wachovia Corp (WB), Washington Mutual (WM), Toll Brothers (TOL), Wells Fargo (WFC), SLM Corp (SLM), Bear Stearns Cos (BSC), Recession

Judging by my latest emails, everybody wants to know "how should I play the financial sector right now?" Let me make it real simple for you: avoid this entire sector at all costs. Don't buy them and don't short them, at least not yet. I've been repeating the same thing over and over since December, so while I know this will leave many unsatisfied, nothing much has changed in two months. In fact, the recent downgrade concerns over bond insurers MBIA (NYSE: MBI) and Ambac Financial (NYSE: ABK), student lender Sallie Mae (NYSE: SLM) and more importantly, prime mortgage lender Fannie Mae (NYSE: FNM), means the situation has gone from bad to worse. Yes, we still risk economic disaster and that's when defaulting consumers could really hurt credit card companies American Express (NYSE: AXP) and Mastercard (NYSE: MA).

But thanks to the lack of transparency in this industry, there's simply no way to accurately judge how bad things really are and as I learned the hard way, accurately gaming disaster is next to impossible.

The good news is that if I had to guess, I'd say the chances of a true disaster are slim. Given that this seems to be an increasingly popular view, many of these financial stocks have been punished to the point of exhaustion. And just as I wouldn't buy them, I wouldn't short them here either. Despite the seemingly steady stream of negative news, the risk of further damage to shareholders and the overall market crashing all around them, broker stocks like Goldman Sachs (NYSE: GS), Bear Sterns (NYSE: BSC), Merrill Lynch (NYSE: MER) and Morgan Stanley (NYSE: MS) have basically stopped going down. They haven't bounced much either, but the nation's three largest banks Bank of America (NYSE: BAC), Citigroup (NYSE: C) and JP Morgan (NYSE: JPM) have managed that feat, with all three bouncing considerably off their lows.

Smaller banks like Wells Fargo (NYSE: WFC) and Wachovia (NYSE: WB) have also joined in the bouncing fun and, if these bounce plays follow the pattern of similarly rebounding homebuilding stocks like Beazer Homes (NYSE: BZH), Toll Brothers (NYSE: TOL) and Centex (NYSE: CTX), their runs could continue. Stronger still firms like E*Trade (NASDAQ: ETFC) and Washington Mutual (NYSE: WM) have seemingly turned the corner in the past month, both doubling off their lows.

So, as you can see, there are a great many crosscurrents at work right now. So many that my head hurts from trying to analyze all the inter-related trends. Yours probably does too after reading about them! And when a messy situation like this gives everybody headaches, there's no way the risk-reward ratio can be that good no matter how you slice it. In time, all will be resolved and when clear trends present themselves, only then will I look to play this sector.

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund

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Cramer on BloggingStocks: To solve our problems, we need to solve housing

Jim Cramer — 2008-02-06T09:00:00+00:00

Filed under: Market matters, Centex Corp (CTX), Federal Natl Mtge (FNM), Toll Brothers (TOL), Housing, Cramer on BloggingStocks, Recession

TheStreet.com's Jim Cramer says before stimulus plans or anything else, we have to get some homes moving.

Hurry. Hurry with the rate cuts. Hurry with the stimulus package. Hurry with the bond insurer bailout. Hurry with the write-offs. Hurry with the Fannie Mae (NYSE: FNM) (Cramer's Take) limits. Hurry with something, anything, because things are still going down and they are going down with increasing speed.

That's what the market said yesterday and the market is saying today already with this ridiculously low 10-year treasury that has not produced the break down to the 4.5 level of 30-year fixed that we need so badly to clear out the inventory of unsold homes.

It is all so obvious that everything has to be hurried. It doesn't take Toll (NYSE: TOL) (Cramer's Take) saying there is little light at the end of the tunnel this morning or Whirlpool (NYSE: WHR) (Cramer's Take) saying this is the worst market in two decades, but that's the feedback we are getting.

Intra-meeting rate cut? We need one yesterday.

I know that we will get them but each day that nothing is resolved is another day that something goes bad. The rate cuts have yet to impact the economy other than some refinancing by people who have bad resets from 2 and 28s from 2006.

Those will continue all year and every time they happen another one of these BBB tranches fails and we get more downgrades and the vicious cycle kicks in again.

Remember where we are: short, sharp rallies -- some would say bear rallies -- followed quickly by declines of some magnitude as the market realizes that the unsold homes haven't been sold and the new homes are hitting the market and the foreclosures are on the increase.

Everything is being dragged out in order to see if we get housing appreciation or stabilization and that's not possible yet, as Toll and Pulte (NYSE: PHM) (Cramer's Take) and Centex (NYSE: CTX) (Cramer's Take) have told us.

It is more than ever a housing issue not because of earnings but because the spigot of loans is getting shut off every day despite the price of interest.

That's because banks know they will take a beating on what they have and all of the BBB paper that is clogging the system still!

Unfortunately none of this is yet obvious to the Treasury or the President as a problem and we are still caught up in the needless stimulus plan instead of a plan masterminded by the FHA to stretch out payments at low levels on resets so that foreclosed homes stop hitting the market at the same time as new homes.

Without it, more pain and nobody is listening.

RELATED LINKS:

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Cramer on BloggingStocks: Fed needs to focus on home prices

Jim Cramer — 2007-12-14T08:53:00+00:00

Filed under: Centex Corp (CTX), Toll Brothers (TOL), Housing, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says until the public feels they won't lose money on a home, no problems will get solved.

Would you ever buy a house in this environment? That's really the ultimate question that has to be asked -- that the Fed should be asking -- if this junk is ever going to come back to life.

I know some of it is so short-term that the jury's back and the verdict is guilty, but most of it hinges on a simple issue: housing depreciation. If you think that your house is going to lose value, default on the second home lien. Which then, we know now, means defaulting on the ultimate mortgage.

The Fed can tinker with LIBOR (I still can't believe they wasted the banking system's time with the LIBOR/auction plan). It can issue statements that are a little more pro-growth than neutral.

Or it can try to change the psychology of the home buyer and homeowner.

Part of what made 1990 be a transition year to a better time rather than a disaster was growth. We were able to outgrow the excess inventory of commercial construction. In other words, we ultimately needed the buildings.

Right now, as I go over the comments the last few weeks from Centex (NYSE: CTX) (Cramer's Take) and Pulte (NYSE: PHM) (Cramer's Take) and Toll (NYSE: TOL) (Cramer's Take) and Ryland (NYSE: RYL) (Cramer's Take), it's pretty clear that they are still, after all of this, too long lots and too long options and too long homes. That's after they've cut the number of homes they are building in half.

That's why, unanimously, everyone knows housing will be bad next year. The supply is still growing faster than household formation, the main reason why people buy homes year after year. People are postponing that buying, good people who could get loans, because it simply isn't worth it. That's what they think.

The fact that the private mortgage insurers -- MGIC (NYSE: MTG) (Cramer's Take) and PMI (NYSE: PMI) (Cramer's Take) -- are going back down has to do with originations. They were doing the old "new money in to bail out old money lost" thing, but the decline in buyers is wrecking their earnings.

That would change if the psychology of loss would change. Even though housing prices dropped 20% in a couple of months this fall according to Centex, they are still too high because they are not moving.

The universal belief that a house is going to lose money underpins all that is wrong, but the Fed refuses to address it. The Fed doesn't want to. It just wants to tinker, Herbert Hoover-like, to fix the problem. The problem literally does go away the moment that the psychology changes.

Of course we are still too close to the peak build. How close? That's a tough one, as half the pundits say we are just finishing year one of the problem and others say we are in year two. I think we are in month 8 so I am obviously thinking pretty negatively. But even I think that in 2009 it might be right and I am planning accordingly personally.

But the Fed gets realistic that it is home prices, not three-month treasury prices, that is the culprit here, and only big cuts in interest rates to change psychology for banks, bank investors, and home owners and buyers, can really begin to stabilize the pricing that is the essence of the problem.

Random musings: Given that the close yesterday was nice and phony and the lift based on nothing, it looks like another day of suffering ahead.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in stocks mentioned.

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Before the bell: PHM, BP, DELL, SIRI, AAPL ...

Melly Alazraki — 2007-11-27T08:40:00+00:00

Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Apple Inc (AAPL), Dell (DELL), Sirius Satellite Radio (SIRI), Centex Corp (CTX), Chevron Corp (CVX), D.R.Horton (DHI), KB HOME (KBH), Lennar Corp'A' (LEN), BP p.l.c. ADS (BP), Toll Brothers (TOL), Analyst initiations

Before the bell: Futures higher after $7.5 billion investment in Citigroup

TheStreet.com has a great piece comparing Apple Inc.'s (NASDAQ: AAPL) iPhone with other alternatives in the market. While mostly the iPhone is found to be the most intuitive, the one minus is the email it seems. Also, Fortune has a piece on the power of Apple's founder and CEO, Steve Jobs. In premarket trading, Apple shares reached $175 -- have you read Georges Yared's post and bought before?

Dell Inc. (NASDAQ: DELL) chose retailer Carrefour Group to be the first European mass merchandiser to sell Dell notebook and desktop computers in its 365 stores in France, Belgium and Spain beginning in January.

Sirius Satellite Radio Inc. (NASDAQ: SIRI) said that Ford Motor Co. (NYSE: F) may have its satellite radio services in approximately 70% of Ford and Mercury 2009 vehicles next year.

Notable calls: BP (NYSE: BP), Chevron (NYSE: CVX) and Marathon Oil (NYSE: MRO) were upgraded by Bear Stearns after the broker lifted its oil forecast for 2008 from $60 to $75 a barrel. BP and CVX were upgraded to outperform from peer perform and MRO to peer perform from underperform. BP shares are up 1% in premarket trading, CVX down 0.1%.

Soleil Securities Group began coverage of several homebuilders with a cautious industry outlook. KB Home (NYSE: KBH) was started with Hold and a $25 target, D.R. Horton (NYSE: DHI) also got a Hold and a $13 target price. Lennar (NYSE: LEN) and Centex (NYSE: CTX) were started with a Buy and a $20 target for LEN. Toll Brothers (NYSE: TOL) was also started with a Buy. Pulte Homes (NYSE: PHM) was started with a Hold and an $11 target price just as Pulte reaffirmed its fourth-quarter profit outlook, but warned that demand for new housing is weak and supply is high. PHM shares are up 5.35% in premarket trading.

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Cramer on BloggingStocks: Belly-up builder would tip the scales

Jim Cramer — 2007-11-19T08:44:00+00:00

Filed under: Starbucks (SBUX), Penney (J.C.) (JCP), Centex Corp (CTX), Federal Natl Mtge (FNM), D.R.Horton (DHI), Lennar Corp'A' (LEN), Kohl's Corp (KSS), NovaStar Financial (NFI), Housing, Cramer on BloggingStocks

TheStreet.com's Jim Cramer explains what could force the Fed to cut rates again.

The housing index just can't rally for a minute. The thing's amazing. The stress of the system is so clearly manifested by this that I have to wonder if the Fed wants this index lower.

The fact that the Fed's speakers never mention things like this index and the homebuilders makes me wonder if this group is actually what the Fed wants to put out of business. I wonder if the Fed thinks that Pulte (NYSE: PHM) (Cramer's Take) and Horton (NYSE: DHI) (Cramer's Take) and Lennar (NYSE: LEN) (Cramer's Take) and Standard Pacific (NYSE: SPF) (Cramer's Take) and Centex (NYSE: CTX) (Cramer's Take) need to go bankrupt before the Fed can ease any more.

Many of these firms lent money recklessly. Are the Fed heads thinking these companies need to pay like the New Centurys and the NovaStars (NYSE: NFI) (Cramer's Take) did? (Are the feds, by the way, thinking that this GMAC company has to go because that was a huge provider of crummy mortgages?)

Either way, they, like Fannie Mae (NYSE: FNM) (Cramer's Take), may be overlooked by Bill Poole, but the market itself looks at the housing index (^HGX), layers on Fannie Mae and puts in the J.C. Penney (NYSE: JCP) (Cramer's Take), Starbucks (NASDAQ: SBUX) (Cramer's Take) and Kohl's (NYSE: KSS) (Cramer's Take) numbers and thinks the Fed is just totally wrong about holding off. Toss in the incredible action from the mortgage insurers, which are giving back much of those squeeze gains coming from bogus buyout rumors, and you really have to worry.

You know me. I think the last place you will find out what the Fed is going to do is from the Fed. How quickly we forget that Bill Poole was telling you the day before the half-point cut that there wasn't going to be a cut without a cataclysm.

These guys just don't know what's about to happen and they want to be reactive. So I would not rule out immediate ease on a major financial belly-up, but not before a homebuilder bankruptcy that tips the scales.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider NovaStar to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

Housing starts fall to lowest level in 14 years

Lita Epstein — 2007-10-17T09:49:00+00:00

Filed under: Bad news, Centex Corp (CTX), D.R.Horton (DHI), Lennar Corp'A' (LEN), Housing

Things keep getting worse and builders get more and more cautious. In fact, according to the Commerce Department's most recent survey, housing starts dropped 10% to an annual pace of 1.19 million in September from a 1.33 million rate in August. That's worse than economists expected. Briefing.com's survey showed economists estimated a more modest fall to 1.29 million.

We haven't seen a housing market this weak since 1993 and the future doesn't look any better. Housing permits were down 7% to an annual rate of 1.23 million in September from 1.32 in August. That's the lowest level for permits in 12 years.

This news follows the report that the Mortgage Bankers Association will release today at its annual convention indicating falling mortgage originations and a builder's confidence survey that was released Tuesday indicating that builder's confidence is at record low levels. The nation's builders are hit hard. The most recent to report was the nation's largest, D. R. Horton (NYSE: DHI), whose orders dropped by 39%. Last week, Moody's downgraded Lennar (NYSE: LEN), Centex (NYSE: CTX) and Pulte (NYSE: PHM) homes to junk bond status.

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Centex (CTX) to take $1 billion in charges as housing slump takes another down

Lita Epstein — 2007-10-12T10:15:00+00:00

Filed under: Earnings reports, Forecasts, Bad news, Centex Corp (CTX), Housing

Centex (NYSE: CTX) of Dallas joins the growing list of home builders that will be taking charges. The Wall Street Journal reported this morning that Centex plans to take $1 billion in charges [subscription required] because of the deteriorating housing market. Charges reported by the Journal include:

$850 million impairment on its neighborhood and land inventory plus $40 million more on land held by joint ventures.
$40 million write-off in pre-acquisition costs and option deposits
$60 million provision for future mortgages.

These loses are on top of the $193 million in write-offs for the first fiscal quarter.

Yesterday, Moody's downgraded Centex's credit rating to junk status and said it expects to see weak conditions in the housing industry until at least 2009. Moody's also told the Journal that Centex, "has had difficulty unloading excess inventory, is facing rapidly declining home deliveries and revenue generation, and has close to a seven-year lot supply."

Centex reports its results officially on October 23. Expect bad news and falling stock prices between now and then.

Visit AOL Money & Finance for more earnings coverage

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Cramer on BloggingStocks: Once Main Street feels the sting, it may be too late

Jim Cramer — 2007-09-17T00:01:00+00:00

Filed under: Market matters, Centex Corp (CTX), Countrywide Financial (CFC), KB HOME (KBH), Housing, Federal Reserve, Cramer on BloggingStocks

Today's important stories from TheStreet.com: Jim Cramer's Portfolios of the Week,
Cramer's 'Mad Money' Recap: Spotting Tops and Bottoms.

Main Street and Wall Street have never been further apart than right now. I can imagine that if you live on Main Street and you don't have to buy or sell a house and you didn't buy one in the last three years, you might be thinking, what the heck? Inflation's going up, oil's going up, food's going up, the stock market's going up. Shouldn't the Fed be tightening? What's wrong with this picture?

To which I say, who cares? The Federal Reserve cuts when there is a credit problem or problems that could cause a dramatic slowdown in the economy. We have one. It's the implosion of securities backed by bogus mortgages. And it infects pretty much everything.

Now we can accept that Centex (NYSE: CTX) and Beazer Homes (NYSE: BZH) and Standard Pacific (NYSE: SPF) and KB Home (NYSE: KBH) may get run out of town on a rail. We don't have to think that Countrywide Financial (NYSE: CFC) matters, and we can have some smaller banks blow up.

But it is not palatable to have a major company not be able to meet payroll because of a problem with the commercial paper market. We can't have housing, autos and retail go down because we can't finance anything. Finance matters. That's Wall Street's job.

If Wall Street can't finance Main Street, then Main Street will eventually feel it, and how good would it be to have that forestalled if it is at all possible. Once Main Street feels it, it can be too late.

Of course if you are of the opinion that it is right and good that Main Street feels the sting that is supposed to be felt by speculators, I can't help you.

I had a discussion today with a staffer at CNBC about whether I could be Chicken Little. I said that all my homework says I won't be and that there is much trouble in the system, but if something "bad" doesn't happen soon in mortgage-land, I could look like I was just one of those doomsayers.

Right now, I look like the latter because of Main Street, but on Wall Street, I am just calling it as everyone sees it on the fixed-income side.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in any of the stocks mentioned.

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Funny bidness -- hedgehogs in peril, loyal diners, hybrids, and Google job tests

Tom Barlow — 2007-08-31T18:00:00+00:00

Filed under: Consumer experience, Competitive strategy, Google (GOOG), Ford Motor (F), Toyota Motor Corp. (TM), McDonald's (MCD), Centex Corp (CTX)

McDonald's (NYSE: MCD) loves hedgehogs -- Ananova reports that McDonald's in Germany is redesigning the holders for its McFlurry ice cream treat after reports that hedgehogs were dying for their love of the confection. Apparently, the creatures would wriggle into the containers to reach the last juicy bits in the bottom, become stuck, and suffocate. The new packaging is currently being tried out on a group of test hedgehogs before going into production.

McDonald's also loves loyal customers like Lee and Mary Humphrey of East Sussex, England. The octogenarians have eaten the same meal in the same McDonald's every day for the past 17 years. After more than 6,000 meals and $50,000 worth of their standard meal, a double hamburger each and shared fries, the couple claims their health is fine. Take that, Super-Size Me!

Won't we ever learn? The Cox News Service reports that, as gas prices level out a bit, Americans have quit seeking out used hybrids and returned to SUVs. Cars.com's Consumer Search Index showed that searches for used Ford (NYSE: F) Escape, Honda (NYSE: HMC) Civic and Toyota (NYSE: TM) Prius hybrids dropped precipitously in favor of gas guzzlers like the Buick Enclave and Ford Expedition EL.

Want to work for Google (NASDAQ: GOOG)? Prepare for a different kind of interview. According to Business 2.0, the company might challenge the candidate to estimate the charge for washing all the windows in Seattle, or calculate how many golf balls would fit in a school bus. The company made news a few years ago by posting math problems on billboards in Silicon Valley, inviting those who solved it to respond, thereby developing a pool of potential hirees from the area's best and brightest.

Answers: About 500,000 golf balls. About $10 million to wash all the windows.

Working for google

McDonald's hedgehog friendly

http://www.ananova.com/news/story/sm_2487251.html

McD's best customers

http://www.news.com.au/story/0,23599,22254663-2,00.html

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Options strategy: Cramer's Centex (CTX) opinion

Brent Archer — 2007-08-24T12:40:00+00:00

Filed under: Analyst reports, Bad news, Industry, Centex Corp (CTX), Options, Technical Analysis, Housing

CNBC's Jim Cramer says he is dumbfounded that Centex Corporation (NYSE: CTX) still pays a dividend, and he is certain that the dividend will be cut or erased barring a miraculous turnaround in housing. Today's news that new home sales were up is at least partially negated by the fact that prices were down. If you are inclined to agree, then it could be a good time to get into a bearish hedged trade on Centex.

After hitting a one year high of $58.42 in December, the stock slid to a one-year low of $28.84 earlier this month. This morning, CTX opened at $31.66. So far today the stock has hit a low of $31.52 and a high of $32.70. As of 11:10, CTX is trading at 32.26, up 0.40 (1.3%). The chart for CTX bearish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

If you agree with Cramer, then for a bearish hedged trade, I would consider an October bear-call credit spread above the $40 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just 2 months as long as CTX is below $40 at October expiration. Centex would have to rise by more than 24% before we would start to lose money. Learn more about this type of trade here.

CTX has not been above $40 since mid-July and has shown some resistance around $33.50 recently. This trade could be risky if the housing market responds well to a potential Fed rate cut, but even if that happens, CTX could have trouble getting above $39, where it topped earlier this month.

Brent Archer is an options analyst and writer at Investors Observer.

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Monday Market Rap: EMC, LEN, GT, EAT, & CTX

Kevin Kersten — 2007-08-13T18:08:00+00:00

Filed under: Major movement, Brinker Intl (EAT), Centex Corp (CTX), Lennar Corp'A' (LEN), EMC Corp (EMC), Options, Goodyear Tire and Rubber (GT), Initial public offerings

Although they spent most of the day in the green the indexes gave up ground through most of the session to close just in the red.

The NYSE had volume of 3.6 billion shares with 1,612 shares advancing while 1,706 declined for a loss of 6.18 points to close at 9,428.86. On the NASDAQ, 2.2 billion shares traded, 1,426 advanced and 1,685 declined for a loss of -2.65 to 2,542.24.

EMC Corporation (NYSE: EMC) rose $1.33 (8%) to $19.05; ahead of it's subsidiary VMware making its debut on the NYSE tomorrow in an IPO that analysts are predicting will be big. EMC will retain 90% of the shares. This is likely the reason for the active calls as EMC Corp. (NYSE: EMC) saw heavy volume on the August 19 calls (EMCHT) with over 56,000 options trading.

Centex Corporation (NYSE: CTX) fell $2.78 (-7%) to $35.63. Lennar Corporation (NYSE: LEN) fell $2.53 (-7%) to $32.92. Brinker International (NYSE: EAT) rose $1.82 (7%) to $28.98. The Goodyear Tire & Rubber Company (NYSE: GT) rose $1.70 (6%) to $28.95.

In options there were 5.4 million puts and 5.8 million calls traded for a put/call open interest ratio of 0.92. The CBOE Volatility Index has been high closing today at 26.57. This is the fear indicator of the market. Not only is the index up, but options on the index are high with the CBOE S&P 500 Volatility Index (NASDAQ: $VIX) moving volume on the August 25 calls (VIXHE) with over 35,000 contracts.

Other stocks with active options include State Street Boston (NYSE: STT) saw heavy volume on the November 75 calls (STTKO) with over 60,000 options trading. Most of the active puts were on the indexes and the iShares Russell 2000 ETF (NYSE: IWM) had volume on the August 78 puts (IOWTZ) with over 86,000 options trading.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.

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Sunday Funnies: buy on fear - housing stocks anyone?

Sheldon Liber — 2007-07-15T21:15:00+00:00

Filed under: Major movement, Blogs, Rants and raves, Centex Corp (CTX), D.R.Horton (DHI), KB HOME (KBH), Toll Brothers (TOL), Economic data, Bargain stocks, Sunday Funnies, Housing

If you are a regular reader of my blogs (like Ethan, who I quote below), you know I try to be accountable for my positions and try to share real experiences that I am going through in my investment world as well as I comment on things affecting the world of stocks and business in general. This week I posted: Frantic market: Retail up, retail down...who cares?, as the market darted up and down and back up. I think it is important to offer a sober perspective among all the noise. Most of what you hear is noise.

Ethan wrote me: "Thank you for the rational non-exuberance blog on market forces. I do have to ask about the particular "crushed" housing market on home building companies as such for being the "Sell" and "Avoid" industry currently. While there is a rumor today about Buffett's bid for Hovanian Enterprise (HOV), do you personally see any value and fundamental still within the industry, to name a few stocks that do give dividends (DHI, PHM, LEN, CTX, KBH, MDC, BZH...)? My gut is Yes but it would contradict the market force and the continuing virus-spiraling down sub-prime mortgage situation that affects many other industries as well.

The short answer is yes. To paraphrase Warren Buffett and other value investors, you simply must buy stocks when the fear in the market (or a sector) reaches a crescendo.

Ethan is asking, have we reached that point? Well, I do not know. Furthermore it does not matter. If the housing market gets worse before it gets better, then housing stocks will likely go lower. So what? The better question is whether the stocks are a value now and how long will they take to bounce back to where they were.

The reason I say it does not matter if they go lower is that I am confident that they are at or close to bargains now. I am already on record and reaffirmed it again this week, that I would be comfortable buying Pulte Homes (NYSE: PHM) all day long at $22 per share now. Since I made that comment it is up, closing Friday at $23.31 for whatever reason. Waiting further for the perfect moment means the stocks could move up without warning, perhaps on an announcement that Buffett has blessed the sector. This happened about two months ago with railroad stocks.

Let's say you bought Pulte last Friday. That is about a 50% discount to it's January 2006 price of $45 and a few months earlier it reached $47. If it took three years to get back to that price your internal rate of return (IRR) exceeds 24%. If it took four years you would be settling for a measley 18% IRR, plus dividends. Those seem like very good returns to me and would beat 95% of your fellow investors. Even a five or six year period would beat the 70 year market averages, I do not see a down side.

I have done this many, many times and been rewarded. I am not a market timer and I do not know when housing stocks will make a strong move upward, but I am confident it will happen and these currently unloved stocks will do so before the majority of investors or sheep ( I mean analysts) will have the courage to make a move.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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