New Homebuilder Short-Sell Report Is Up

This is my best work yet. This particular homebuilder had $262,000 of debt on the balance sheet for every home it delivered at the peak of the market. Today is has a stunning $630,000 of debt for each home it has delivered over the last 12 months. It’s contract signings are in decline per its latest 10-Q disclosure.
In my view, shorting this stock now offers the investor the potential for a 70% gain over the next two years. In addition to its high level of debt, I have uncovered a high degree of questionable and misleading accounting maneuvers this company uses to make its p/e ratio look lower and to make all of its other financial analysis ratios appear more favorable. I can honestly say that I have never come across worse financial disclosure at a large-cap public company.

This post was published at Investment Research Dynamics on September 9, 2014.