KB Homes (NYSE:KBH) met expectations and reported really terrible numbers. They are a home builder in a lousy market.
Jeffrey Mezger, president and chief executive officer has been reduced to simplistic comments as this quote illustrates: “We believe the current housing market conditions will likely continue until there are meaningful and sustained improvements in job growth and consumer confidence.”
Brilliant analysis. The signal to investors is “We are lost deep in the woods and cannot find our way out” Why would the CEO put out a comment like that? After all the negative housing news investors are painfully aware that the economy stinks. But the stock tanks another 13%.
The market cap is below $1 billion. You have to believe Americans will fall back in love with house ownership some day. KB Homes is not generating wealth as it lists in windless markets. Investors would only be too happy to be bought out by a deep value investor with a long-term view.
So Jeffrey Mezger keep bad mouthing the stock so everyone becomes disheartened and the take over price is more attractive. Home builders may need to become self eviscerating to restructure for the future. Capitalism is a tough blood sport too bad for current investors. A solvent new mortgage provider is just pretty window dressing for the new team.
Hey isn’t this the spot when some Asian guy walks in and writes a cheque, scoops up the marbles and laughs on his way to his bank. Probably.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.
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