New Homebuilder Short-Sell Report Is Up

This is my best work yet.   This particular homebuilder had $262,000 of debt on the balance sheet for every home it delivered at the peak of the market.  Today is has a stunning $630,000 of debt for each home it has delivered over the last 12 months.  It’s contract signings are in decline per its latest 10-Q disclosure.

In my view, shorting this stock now offers the investor the potential for a 70% gain over the next two years.   In addition to its high level of debt, I have uncovered a high degree of questionable and misleading accounting maneuvers this company uses to make its p/e ratio look lower and to make all of its other financial analysis ratios appear more favorable.   I can honestly say that I have never come across worse financial disclosure at a large-cap public company.

You can access the report here:   Homebuilder Research Reports

The DJUSHB home construction index has bounced nicely off of a very oversold technical condition.  While it could move higher, and up and over its 50 day moving average, the 50 dma has crossed below the 200 dma – the nefarious “death cross.”

While I think right now is a great time to establish or add to a short position, please manage your capital prudently.  This particular homebuilder does not have a huge short position yet like many other homebuilders.  That will limit the “short-squeeze” spike other stocks experience.

The housing market is starting to really fold, I don’t care what the propaganda artists and spin-meisters are saying.  They are wrong.

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4 thoughts on “New Homebuilder Short-Sell Report Is Up

  1. The Apple watch is the black swan we have been all waiting for. Very probably homebuilders will be hit hardest. Great work, David. (Sorry won’t buy your report as I never go short no matter how lucrative it looks.)

    1. Shorting the homebuilder sector is THE biggest no-brainer market play I’ve ever seen since the
      top of the internet bubble and shorting tech stocks.

      These homebuilders have already dropped over 13% since Feb 2013 while the SPX has gone up over 20%.

      When the SPX starts to shit the bed, the home builders will be annihilated.

  2. Anyone who disputes these conclusions or who tries to make the case for economic recovery, including recovery of housing, is simply clueless. Your research and analysis is right on target.

    1. Thanks for the feedback, Amy. I appreciate it.

      Paul Craig Roberts said this about my latest housing short-sell report: “Wow, what a report”

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