(This is an excerpt from an article I originally published on Seeking Alpha on April 16, 2012. Click here to read the entire piece.)
On January 13th this year, I argued that it was time to buy the dips in homebuilders in preparation for a bottom sometime in 2013. I targeted KB Home (KBH) in particular. {snip}
Source: FreeStockCharts.com
The selling in KBH turned especially intense after it reported earnings last month. The stock dropped directly from its long-term downtrend and its 50DMA.
KBH’s turn in fortunes has transformed it from the second-best performing homebuilder in my universe for 2012 to a middling performer. Of course, 20% year-to-date is still enviable.
Click image for larger view:
The ranked year-to-date performances fr these homebuilders are now:
- Hovnanian Enterprises Inc. (HOV): 38%
- PulteGroup, Inc. (PHM): 35%
- Lennar Corp. (LEN): 33%
- KB Home (KBH): 20%
- DR Horton Inc. (DHI): 18%
- Beazer Homes USA Inc. (BZH): 17%
- Toll Brothers Inc. (TOL): 12%
- Meritage Homes Corporation (MTH): 12%
Shorts have also increased the pressure on KBH. Shares short increased 21% from the end of January to the end of March. Shorts are now an incredible 62% of KBH’s float.
Data Source: NASDAQ.com
{snip}The first buying target is $7.50…{snip}
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on April 16, 2012. Click here to read the entire piece.)
Full disclosure: long KBH shares and puts