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Sector Watch: Homebuilding and Construction, Gurus Active on 52-Week Lows

August 30, 2013 | About:
Sally Jones

Sally Jones

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According to Reuters, the Pending Home Sales Index for July decreased 1.3% as higher mortgage interest rates slowed the market. The National Association of Realtors cited that while pending home sales declined 1.3% for the month of July, sales were 6.7% higher than last year’s levels. While the media presents relative ways to measure a housing shortage or a surplus of inventory, one thing is clear, the billionaires are active in this sector.

One month ago, only two homebuilding stocks were on a 52-week low; now there are nine out 34 companies, according to the GuruFocus Value Screen for finding 52-Week Lows. The low ratio is 0.26.

Here’s a look at four residential construction companies, and the billionaires who hold them.

Industry Sector: Homebuilding and Construction

Highlight: Gafisa S.A. (GFA)

The current GFA share price is $2.36, or 55.0% off the 52-week high of $5.24.

Down 42% over 12 months, Gafisa S.A. has a market cap of $519.9 million, and trades with a P/B of 0.50.

Company: Gafisa S.A. is a homebuilder in Brazil. The company’s core business is the development of residential buildings in 94 municipalities. The company is also engaged in the development of land subdivisions, also known as residential communities and entry-level houses. Gafisa S.A. also provides construction services to third parties.

Guru Action: As of June 30, 2013, the top Guru owner is currently Steven Cohen who made a new buy of 14,827 shares at an average price of $3.64 for a loss of 34.3%. Cohen has bought and sold GFA several times; his five year trading history shows a red streak of double-digit losses.

Jim Simons sold out as of the second quarter, unloading 536,200 shares at an average price of $3.64, also for a loss of 34.3%. His trading pattern is very similar to Cohen’s over the past five years.

Track share pricing:



Highlight: M/I Homes Inc. (MHO)

The current MHO share price is $18.54, or 36.2% off the 52-week high of $29.07.

Up 0% over 12 months, M/I Homes Inc. has a market cap of $470.35 million, and trades at a P/E of 19.20 and a P/B of 1.40.

Company: M/I Homes Inc. was incorporated in 1973. The company and its subsidiaries build and sell single-family homes, attached townhomes and condominiums to first-time, move-up, empty-nester and luxury buyers. The company's homes are marketed and sold under the trade names M/I Homes and Showcase Homes.

Guru Action: As of June 30, 2013, the top Guru owner is Donald Smith with 468,238 shares after reducing his position by 20.38%. Smith has averaged a gain of 95% on 1,856,523 shares bought at an average price of $9.92.

His MHO holding history:



Paul Tudor Jones holds 17,100 shares after increasing his position by 14%. He has averaged a loss of 23% on 17,100 shares bought at an average price of $25.20.

Bruce Kovner and Arnold Schneider sold out as of the end of second quarter, both losing 20.5%. Check out their MHO trade details.

Tracking share pricing:



Highlight: D.R. Horton Inc. (DHI) – Yield 0.40%

The current DHI share price is $17.93, or 35.4% off the 52-week high of $27.75.

Down 6% over 12 months, D.R. Horton Inc. has a market cap of $5.79 billion, and trades at a P/E of 14.60 and a P/B of 1.50.

Company: Starting in 1978, D.R. Horton Inc. is a homebuilder. The company constructs and sells homes through its operating divisions in the U.S., in 26 states and 77 metropolitan markets, mainly under the name of “D.R. Horton, America's Builder.”

Guru Action: As of June 30, 2013, the top Guru owner is Ken Heebner with 8,660,000 shares after he increased his position by 42.32%. Heebner first bought in the first quarter of 2012 and gained 23.9% on 6,600,000 shares bought at an average price of $14.47. He has averaged a gain of 3% on 11,965,000 shares bought at an average price of $17.33.

Andreas Halvorsen made a new buy of 622,000 shares in the second quarter, as did Steven Cohen for 49,951 shares.

Louis Moore Bacon sold out his DHI at the end of second quarter 2013.

Check out all seven Gurus holding DHI.

Track share pricing:



Highlight: M.D.C. Holdings Inc. (MDC) – Yield 1.80%

The current MDC share price is $27.74, or 34.6% off the 52-week high of $42.41.

Down 20% over 12 months, M.D.C. Holdings Inc. has a market cap of $1.36 billion, and trades at a P/E of 4.60 and a P/B of 1.30.

Company: M.D.C. Holdings Inc. (MDC) was incorporated in Colorado in 1972, operating in both homebuilding and financial services. Its homebuilding operations consist of wholly-owned subsidiary companies that generally purchase finished lots for the construction and sale of single-family detached homes to first-time and first-time move-up homebuyers under the name ‘Richmond American Homes.’

Guru Action: As of June 30, 2013, the top Guru stakeholder is new buyer John Keeley with 602,000 shares; Jim Simons is second with 427,866 shares after reducing his position by 30.06%; Chuck Royce is third with 305,850 shares after increasing his position by 62.38%.

John Buckingham and Paul Tudor Jones also hold shares for 190,032 and 24,000, respectively. Gurus Steven Cohen and Arnold Van Den Berg sold out as of the second quarter of 2013.

Check out their MDC trading histories here.

Track share pricing:





GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

Check out the GuruFocus special feature 52-week low screener to find the stocks hitting new lows but are still held by top investor Gurus and Insiders.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 4.3/5 (4 votes)

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