HOV shares have been diluted heavily since 2011, but esp. since 2012 which coincides with a large increase in the stock price. What is the motivation for this dilution? Is this related to the 2012 increase in HOV stock?
The motivation is that they are insolvent with negative 500 million shareholder equity. So they sell more shares whenever possible to stay in business. more or less. The only reason the stock is over $2 share is because people love to believe that maybe the lowest priced home building stock might be a lottery pick. At over $5 though it is hard for me to understand how it could be a good investment given they have negative $5/share book value and havn't paid a dividend on the preferred stock since 2007 and it trades at 45 cents on the dollar. To justify $5/share, you have to believe they could earn $500 million or more over the next few years to erase the shareholder deficit. I don't believe that is likely, given their high debt burden with high interest rates.
never let the fundamentals get in the way of making money. HOV has been in an uptrend since it broke above the 50 dma in june then retraced baced to the 50/200 dma in august. i'd wait for price to drop below the 50 dma and possibly retrace before shorting.