Cramer says sell HB's 1 week before fed cut

Discussion in 'Trading' started by silk, Sep 10, 2007.

  1. silk


    Ok, i'm holding Cramer to his call he is making tonight. 1 week before the fed meeting which is expected to mark the start of the easing cycle, He is calling for the HGX to fall another 15%. I have the other side of the trade on. I'm using Cramer's own playbook (why he is ignoring it now i don't know) to own HB's when fed starts cutting rates.

    Today's closing numbers so we can track them quickly in future.

    CTX- $26.22 $39 book value
    BZH -$ 9.45 $37 book value
    KBH - $26.25 $31 book value
    DHI - $13.69 $18 book value
    MHO - $14.90 $41 book value
    HOV - $9.99 $27 book value
    MTH - $15.95 $36 book value

    Sure book values will be impared 20-40% during the next few years, but book values will still be above where they were in 2001 when some of the above stocks were trading much higher than the current prices.

    Take HOV for example. HOV traded $20 in may 2002 when its book value was $13. Now it trades $10 when book value is $27! Even if HOV loses another $500 milllion after tax book value will still be very high relative to current share price to start the next cycle when housing inventory normalizes.

    I'm in the above stocks looking for a squeeze into November after 2 rate cuts. I'm betting there will be one week in Novemember when people are talking about the very low mortgage rates and hope for some stabilization in housing. 1 week of optimism all i need at these prices for huge SQUEEZE. If the Squeeze happens sooner than November I will gladly head for the exits.

    And yes, the name of my car is Beazer Homes. Purchased with trading profits in 2002 from that name. I never lose in Bezer Homes. Not yet anyway, knock on wood.
  2. No one knows what the book value of homebuilders are because no one knows how much their inventory is worth or the exposure they have to bad loans made through their Mortgage Subs.

    Good luck.

  3. dhpar


  4. silk


    One more prediction. Cramer will jump on board and take credit for any HB rally. Just as he did on every bounce in the builders on the way down. This is similar call to his don't buy OIH until 115 last AUG. Well it never got there and now he trumpeting SLB all way up to $100.

    The BZH news is manipulation by bond holders to depress shares and bonds so they can buy more at a discount before the rally. The only way to get people to short BZH under $10 when it has $37 in stated book value is to scream BK. Or so i have been told.
  5. dhpar


    another way to make people short is to have the real bankruptcy...:)
  6. Daal


    hb look more and more enticing. sure heck more enticing than banks or brokers supposedly 'cheap'
  7. silk


    Cramer loved HB's on one segment of his show in 2005 when he called them "Land Banks". Now after they fall 80% and are finally trading for a decent discount to the value of their land holdings, he is still scoffing at them against his play book which clearly says to buy them on the rate cuts. I like them. Who knows if I will make any money. Not telling anyone else to buy. Do your own research.
  8. gaj


    most of cramer's general playbook is pretty good.

    however, that only gets you so far for ratings and TSCM subscriptions. so he always tweaks it, goes against his own advice (see NT years ago for his most blatant ignoring his playbook), and 'miraculously' winds up with bad stuff.

    that's why: cramer in general, fine. cramer specifically? no better than a dartboard, and when he jumps on board something that's had a long trend, once there's a technical signal (usually soon after), it's time to fade cramer, HARD.
  9. The LEAD statement is for a trader that is essentially bottom fishing in a sector that is down and its fundamentals are shaky at best.

    Unfortunately, baby boomers are buying 2nd homes for investment and some quick profit.

    That is not going to be successful. Some of my friends have bought big houses, i.e 5000 to 7000 sq.ft.

    And these are empty nestors. Stock market gains and home price increases are making a lot of people rich and in buying mood...

    Guys, we should not buy this sector till a solid bottom is formed. And till then, I would rather SHORT the sector...
    #10     Sep 10, 2007