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Sector Watch - Home Building: Gurus Active

December 10, 2013 | About:
Sally Jones

Sally Jones

49 followers
In late November the National Association of Realtors reported that pending home sales slid further in October for the fifth consecutive monthly decline. Based on the Pending Home Sales Index, contract signings dropped 0.6% to 102.1 in October 2013, compared to 103.8 in October 2012.

Industry Sector: Home Building and Construction

Back in August, this sector showed nine out 34 companies at a 52-week low. According to the GuruFocus Value Screen for finding 52-Week Lows, there are currently five out of 36 companies on a 52-week low with the sector’s low ratio at 0.14.

Here’s a look at guru and insider trading activity on a few residential construction companies, starting with Hovnanian Enterprises Inc., a long-time interest to billionaire investors. The company reported financial results for the third quarter of 2013 with total revenues up by 23.6% at $478.4 million, compared to $387 million in the same quarter of 2012. The company’s home building gross margin percentage was 20.3%, increasing 210 basis points for the reporting quarter, compared to 18.2% in the third quarter of 2012. Hovnanian’s net income was $8.5 million for the reporting quarter, down from the same quarter a year ago at $34.7 million.

Highlight: Hovnanian Enterprises Inc. (HOV)

The current HOV share price is $5.15, or 30.7% off the 52-week high of $7.43.

Down 6% over 12 months, Hovnanian Enterprises Inc. has a market cap of $715.5 million, and trades with a P/S of 0.40. The company does not pay a dividend.

First incorporated in 1967, Hovnanian Enterprises Inc. designs, constructs, markets and sells single-family detached homes, attached townhomes and condominiums, mid-rise and high-rise condominiums, urban infill and active adult homes in planned residential developments. The company consists of two distinct operations: home building and financial services. The company’s home building operations consist of six segments: Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West. Its financial services operations provide mortgage loans and title services to the customers of its home building operations.

Guru Action: As of Sept. 30, 2013, there are three guru stakeholders and one recent insider selling.

As of Sept. 30, 2013, the top guru owner is Steven Cohen who increased his position by 46.48%, buying 8,386 shares at an average price of $5.35 for a loss of 3.7%. Cohen has bought and sold out three times in his trading history. He averaged a loss of 11% buying 26,504 shares at an average price of $5.77. Selling, he also averaged a loss of 10% on 76 shares at an average price of $5.74.

Track share pricing, revenue and net income:

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Highlight: M.D.C. Holdings Inc. (MDC)

The current MDC share price is $29.44, or 30.6% off the 52-week high of $42.41.

Down 14% over 12 months, M.D.C. Holdings Inc. has a market cap of $1.44 billion, and trades at a P/E of 4.80 and a P/B of 1.20. The dividend yield is 0.80%.

Incorporated in 1972, M.D.C. Holdings Inc. operates in both home building and financial services. MDC’s home building operations consist of wholly-owned subsidiary companies that 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 Sept. 30, 2013, there are five guru stakeholders and very active insider selling.

As of Sept. 30, 2013, the former top guru stakeholder John Keeley sold out his position after two quarters of losses. He first bought 602,000 shares in the second quarter of 2013 at an average price of $36.09, taking a loss of 18.4%. In the third quarter he sold 602,000 shares at an average price of $30.56 per share, for a loss of 3.7%.

As of Sept. 30, 2013, the new top guru stakeholder Chuck Royce increased his position by 38.48%, buying 117,700 shares at an average price of $30.56, taking a loss of 3.7%.

Over a five-year history he has had eight quarters of gains. Royce has averaged a 5% loss buying 622,020 shares at an average price of $31.06 per share. Selling, he averaged a 12% loss on 563,150 shares at an average price of $33.64 per share.

Check out more MDC trading histories.

Track share pricing, revenue and net income:

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Another home builder of interest is Japan’s FJKNF. Numerous recent buys have been made by company insiders.

Highlight: First Juken Co Ltd. (FJKNF)

The current FKJNF share price is $11.08.

Up 0% over 12 months, First Juken Co. Ltd. has a market cap of $152.83 million, and trades with a P/E of 6.50 and a P/B of 0.80. The company does not pay a dividend.

Incorporated in 1999, First Juken Co. Ltd. is a Japan-based company engaged in the development of residential housing and condominium buildings. The company is also traded in Japan.

Insiders: Check out ten recent insider trades.

No guru trades have been made.

Tracking data since 2012:

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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: 5.0/5 (1 vote)

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