(This is an excerpt from an article I originally published on Seeking Alpha on January 12, 2014. Click here to read the entire piece.)
Meritage Homes (MTH) rolled out a series of announcements last week culminating in the pricing of 2.2M shares in a common stock offering at $45.75/share. With net proceeds of $95.9M, this offering should increase cash and cash equivalents on the balance sheet by 56%. MTH announced that it will use this offering for “…working capital, potential expansion into new markets and/or expansion of existing markets, including the possible acquisition of other homebuilders or assets, and general corporate purposes.” Given that several fellow homebuilders aggressively continue to buy land and acquire choice builders, I strongly suspect that MTH is positioning itself to better compete in those arenas. This activity is more confirmation that builders expect solid performance in 2014 and 2015.
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Source: FreeStockCharts.com
MTH remains one of the least shorted of the homebuilders. Shares short are only 3.7% of float. Shares short were as high as 2M a year ago and last spring. Shorts cut that amount in half, standing at 1.0M as of December 13, 2013.
Source: NASDAQ short interest
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on January 12, 2014. Click here to read the entire piece.)
Full disclosure: no position