KBH & Housing Stocks

KBH as expected, released a worse than expected losses. Housing stocks are not seeing bottom yet. However, Jim Cramer said in CNBC yesterday that KBH is a good stock to buy and hold. The stock went up after what he said yesterday. I learnt not to trust what Cramer says. (like his Bear Stearns fiasco).

Anyway, for housing stocks, it is good to sell on rallies. The housing stocks such as TOL, KBH, RYL had been having a good time recently. So it should be good to short.

If there is no other good news, I expect KBH and the other housing stocks to gap down and stay down.

Careful though, the USD700 billion bailout plan which is on and then off, might be on again and spoil my shorts. As a rule, I shorted using Jan options for housing stocks.

I played both Jan Put options and Bear Call Spread for housing stocks.

- PersianCat (Millionaire-in-progress)

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08:04
KBH KB Home reports wider than expected loss, misses on revs (21.16 ) - (From Breifing.com)
Reports Q3 (Aug) loss of $1.87 per share, $0.65 worse than the First Call consensus of ($1.22); revenues fell 55.7% year/year to $681.6 mln vs the $734.7 mln consensus. The 2008 third quarter results included a pretax, non-cash charge of $82.2 mln for inventory and joint venture impairments and a charge of $58.1 mln to record a valuation allowance against net deferred tax assets generated during the quarter. The co's cash balance at August 31, 2008 totaled $942.5 mln, up 46% from $645.9 mln at August 31, 2007. The Company's debt balance at the end of the current quarter was $1.88 billion, down $284.1 mln from $2.16 billion at the end of the 2007 third quarter, largely due to the redemption of debt. "Continued deterioration in new home demand, new and existing home prices, excessive inventories and mortgage credit availability prevailed across most U.S. housing markets in the third quarter... These difficult conditions have now been exacerbated by the recent, unprecedented turmoil in financial and credit markets, and it is too early to assess whether the federal government's proposed interventions will be effective. As our industry navigates a housing market decline now subsumed by a larger global financial crisis, we at KB Home continue to focus on three integrated strategic objectives: maintaining a strong financial position, restoring operational profitability and positioning ourselves to capitalize on a housing market recovery when it occurs... The sharp decline in net orders we experienced in the third quarter reflects the broader dynamics of the housing market and our strategic responses to these conditions - reducing our active community count, implementing a comprehensive product transition and executing a more disciplined pricing strategy... Market fundamentals appear unlikely to improve significantly in the near term, as foreclosures continue to rise, housing inventory overhang remains at historically high levels and mortgages have become more difficult to obtain. In this environment, we will continue to pursue opportunities to optimize our financial results while operating conditions in our markets across the country move, at varying rates, towards a long-term supply and demand equilibrium."