Mr. David Keller

GLG News by Mr. David Keller, Former Chief Executive Officer

GLG News is now G+ Insights

G+ is a community for professionals, academics and entrepreneurs to connect through online discussions and in-person meetings. You will continue to see G+ Insights (formerly GLG News) here as well as on the G+ website, where you can share and discuss the G+ Insights you read.

Continued Housing Difficulties

May 14, 2008

Analysis of:The Housing Crisis is Over | online.wsj.com

The housing bust is not over and trends continue to be negative.  The only positive activity is that homebuilding stocks have gone up, without a good reason.  We still have a ways to go to work through all this.

Direct Expensing of Interest by Homebuilders

May 6, 2008

Analysis of:Hidden Mortgage Risks Abound in U.S. Home Market | www.bloomberg.com

Not capitalizing interest in inventory causes acceleration of losses and deterioration of book value.

ARE HOMEBUILDING STOCK PRICE INCREASES PREMATURE?

April 24, 2008

Analysis of:Construction Companies Are Clamoring for Managers | online.wsj.com

Recently, stock prices of most public homebuilders have increased 20-30 percent.  This despite no visible signs of improvement in the overall housing industry.  It seems early in the cycle for these stock price upward movements, as it appears the housing market has not yet found bottom.  Equity buyers at the present stock prices must be patient and have a mid- to long-term perspective on their investments. There may be several reasons for the recent price appreciation including: 1. Short sellers covering positions as hedge funds encounter increasing risks in other parts of their portfolios or simply decide to concentrate their efforts in another sector. 2. A perception the government enacted or proposed initiatives will cause significant improvement in homebuilding activities, including sales and financing of homes. 3. A belief the housing downturn is at or nearing bottom and this is the appropriate time to purchase homebuilder stocks.

IMPAIRMENT REVERSALS – IMPACT ON COST OF GOODS SOLD

April 24, 2008

Analysis of:New-Homes Supply Builds; Durable Goods Orders Slide | online.wsj.com

Homebuilders have recorded large inventory impairments over the last couple of years.  Most of these impairments have been for land and lots.  As these previously impaired lots are built on and a completed home is delivered, the land component as a percentage of Cost of Goods Sold may decline significantly.

Analyzing Homebuilder Risks

March 3, 2008

Analysis of:Decline in Home Prices Accelerates | online.wsj.com

There are risks associated with homebuilding assets and contingent obligations.  This article alerts the reader to areas of interest.

Hidden Homebuilding Assets

March 3, 2008

Analysis of:Decline in Home Prices Accelerates | online.wsj.com

Homebuilding impairments and tax valuation reserves provide future accelerated income streams, when the recovery occurs.

Accelerated Reductions in Book Value

March 3, 2008

Analysis of:Decline in Home Prices Accelerates | online.wsj.com

Issues associated with loss of income tax benefits result in accelerated reduction of book value in homebuilders.

Joint Venture Completion Agreements

March 3, 2008

Analysis of:Decline in Home Prices Accelerates | online.wsj.com

Unforseen risks associated with homebuilder joint venture agreements and accompanying completion agreements.

What is the 2008 outlook for homebuilding?

January 14, 2008

Analysis of:Analyzing Homebuilder Risks | seekingalpha.com

What will happen in 2008 for the homebuilding industry? Will cash be generated? Will there be failures? Will there be profits?

Income tax update for homebuilders

December 31, 2007

Analysis of:INCOME TAX UPDATE FOR HOMEBUILDERS | online.wsj.com

What are the econonmic and cash impacts from a tax standpoint of large impairment losses recorded by homebuilders?  How/when can cash be recovered from these losses?

Homebuilding Gross Margins May Not Be What They Seem

December 31, 2007

Analysis of:Homebuilding Gross Margins May not Be What They Seem | online.wsj.com

Some reported gross margins from home sales may appear to be higher than they really are.  Investors should be alert for situations where reported gross margins are inflated by prior inventory writedowns.

Homebuilding--2012 Prediction

September 7, 2007

Analysis of:credit flu may delay housing recovery | ww.wsjournal.com

Consolidation will occur in the industry The strongest companies will survive the downturn five years from now there will be significant changes to the industry  

Homebuilding--The Hidden Cash Requirement

July 10, 2007

Analysis of:Rule of Thumb Hammered | online.wsj.com

Payment requirements under land option contracts are an important consideration when evaluating the cash flows of homebuilders.

WHEN WILL HOUSING RECOVER?

June 12, 2007

Analysis of:Housing Stocks Tumble on Higher Rates, Threat of Continued Price Declines | biz.yahoo.com

There is widespread interest in the housing industry, housing stocks and bonds, etc.  This impacts many industries and companies.  The article offers my point of view about the current state of the homebuilding industry and suggests when and why things will turn around. 

Beazer Homes Mortgage Woes

April 11, 2007

Analysis of:Feds Probe Beazer Homes | www.msnbc.msn.com

There has been considerable recent press coverage about alleged mortgage abuses by Beazer Homes.

This appears to be compounded by overall concerns about subprime mortgage activities.

It is important to maintain perspective on this issue as it relates to Beazer

HOMEBUILDING: DEPOSIT AND PREACQUISITION COSTS

April 9, 2007

Analysis of:Ryland Announces Preliminary Results for the Quarter Ended March 31, 2007 | www.marketwatch.com

 

Recent slowdowns in the absorption of housing inventories have resulted in a series of earnings charges from writeoff. of land deposits, preacquisition costs, goodwill and other intangibles, and the creation of valuation reserves for land, work in process and finished homes.

This article explores issues associated with land/option deposits and preacquisition costs.

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