‘Weakness Accelerated To The Downside’ For Toll Bros.
Reuters has the latest on the homebuilders. “Luxury home builder Toll Brothers Inc. on Tuesday further reduced its forecast for home sales in the current year, as new orders for the first quarter fell 29 percent on slumping demand.”
“The company’s deteriorating forecasts may indicate that the slowing U.S. housing market may be declining faster than previously thought, Raymond James and Associates analyst Rick Murray said. ‘Their quarter ends January 31, and a lot of people have been hypothesizing that the weaknesses we saw in October, November and December would perhaps turn around in the beginning of the year,’ he said. ‘This would seem to indicate that those trends have not reversed course and perhaps have even accelerated to the downside.’”
“Murray also said Toll’s indicator also reflects a tough market in the Washington D.C. corridor, where Toll is a significant player.” “Toll also said slowing demand..forced it to cut its outlook to sales of 9,200 and 9,900 homes during the fiscal year, ending on October 31, from a previously lowered view of 9,500 and 10,200 homes. New orders during the quarter fell to 1,572, from 2,209, while the value of the contracts declined 21 percent to $1.16 billion.”
“‘Demand at our communities, which began to soften in early September, now appears to be improving, although demand pressure from speculators has certainly passed,’ CEO Robert Toll said in a statement.”
“Toll Brothers rattled the market in November when it first cut its forecast to a range of 9,500 to 10,200 from 10,200 and 10,600. Since then, Toll shares, which closed Monday at $31.20 on the New York Stock Exchange, are down 21 percent. Shares were down 3.85 percent at $30 in pre-market trading.”
From Bloomberg: “Robert Toll said buyers were holding off because they expect the market to soften. ‘We believe when expectations of home-price appreciation are strong, buyers are willing to wait a year or more for their homes,’ Toll said. ‘When their expectations are more modest, they are less willing to commit so far in the future.’”
I thought Robert Toll said that speculators were not involved in Toll’s communities?
Just wanted to repost something I had in the other thread here …
Looks like someone beat me to the punch with the TOL news. Yet more proof that things are going downhill fast. Incidentally, isn’t it funny how in the past few days, TOL shares started breaking down out of their multi-week trading range on rising volume?
I love how they throw in that demand appears to be picking up a bit now. I have ALWAYS said that the spring will be busier, sales-wise, than the late fall and winter. It happens in EVERY real estate cycle, even the down ones. The problem is, the increase in sales will be nowhere near as big as the increase in inventory — hence, the “spring bailout” that all these moron real estate investors were counting on won’t be strong enough to save them. My view is that the panic will really start settling in come July or August when people realize they’re still stuck holding properties they were certain they could unload in the spring.
1572 homes sold/quarter = 6288/year, so TOL is banking on a significant increase in their estimate of 9200/9900.
$150k off this weekend only
LOL…Centex couldn’t sell homes for a $100K discount, now they up the ante to $150K?
http://www.centexhomes.com/Sacramento/norcal12hoursale.asp?DivisionID=1016
I love the wording on that Centex ad:
” Next Saturday some will watch TV……….some will rake leaves………some will save up to $ 150,000 on a new home…..”
LOL !!!!
So they are saying that people will do yardwork, watch TV or buy a house.
You know, the typical, laid-back casual things that every American does on a lazy Saturday afternoon.
TOL alluded to this revision of 2006 expectations in its 10-K filing for FY 2005 ending Oct. 31. mad_tiger’s January 13 post to Ben’s blog:
“VERY interesting that in their FY 2005 10-K, Toll Brothers would comment on weakening demand “continuing into the first quarter of fiscal 2006″. Toll’s FY ends Oct 31. Unless things we REALLY bad, Toll would not have said anything about the first two months of FY 2006 in its’ FY 2005 10-K.”
God… the TOL put are paying off. I have to roll down to a lower strike price.
I wish I’d bought more… but on the other hand… greed kills.
Please oh please…let the bloodbath for the fat pigs start…or at least squeaze some fat out of those profits.
BwaHaHaHaHaHa!!!
TOL qualifies for PPT methdone today, IMO.
oops — meant “methadone” (I miss that pre-screeing of comments on blogger)
… screening … (Time to brush up on my typing skills!)
Commence Pump and Dump Sequence ………Now!!!!!
God… the TOL puts are paying off. I have to roll down to a lower strike price.
I wish I’d bought more… but on the other hand… greed kills.
————————————————————————
Therefore, send not to know
For whom the bell TOLs,
It TOLs for thee.
Its a HB massacre today!
What is the opposite of a stock split? Does anyone else think it is time for TOL to consider this, now that their stock price has erased all the 2005 gains and is starting to retrace the bubble path back towards Y2000 and before?
“What is the opposite of a stock split?”
A “reverse” stock split.
Getstucco,
I think it’s called a reverse split
This from Toll’s press release:
“The company said it bought back about 630,000 shares in the first quarter at an average price of $34.61. Toll said it expects to purchase shares “on an opportunistic basis.” Its current buyback program authorizes the purchase of an additional 15.1 million shares.”
There’s your “Plunge Protection Team,” Getstucco. The question is, when do these jokers run out of cash? That will be the bitter end of the stock price…
MAR confirmed cooking the numbers-hehehehhehe
like LIE-RAH at NAR
Stock buybacks? A BRILLIANT strategy ! Just think how pleased all the shareholders are that management bought shares at $34.61. The loss of about 10% a few days after quarterend must thrill all involved !
Noticed something strange in the Winter Garden, Florida market last week. For the first time since the end of Dec., the inventory remained flat. For several days.
And then, Monday, it spikes again by 10.
Weird.
We’ll be looking to buy in July (move in Aug. 1) in Northern New Jersey. I’ll let you guys know about the process and lowball offers and all that jazz.
Even Dogcrap_Green has capitulated and admitted we have been right all along and the HBs are cratering.
Toll’s balance sheet is carrying lots of land. some is cheap, some is fair but there are IMO billions worth of overpriced risk.
How about a house buyback program for speculators?
“Additionally, Toll said some markets are seeing inventory levels increase as speculative buyers are now becoming sellers.
“Once this excess inventory clears the market, we expect that the fundamentals of constrained lot supplies and demographics-driven demand should return,” Toll said.
So buy them out and you’re home free, I guess.
BTW, don’t forget short sellers, many of whom have large profits, have to buy TOLL shares to bank their profits.
They are your so called “plunge protection team”.
Smart money shorted when they suspected weakness was on the way, and are probably buying back those shares from the “not so smart” money that is actually surprised by this news.
Buy the rumor - sell the news is reversed in this case
to read: short the rumor buy the news.
Robert Toll said buyers were holding off because they expect the market to soften. “We believe when expectations of home-price appreciation are strong, buyers are willing to wait a year or more for their homes,” Toll said. “When their expectations are more modest, they are less willing to commit so far in the future.”
Congratulations Bob, you just defined a bubble!
On behalf of the long term short sellers, I think we will wait until TOL files for bankruptcy before we cover our shorts. And yes, we know that the PPT will make several efforts to “spook” the shorts. It is a known hazard of short selling.
And unlike you, we recognize the reality of the PPT. But they can’t do much about the bubblers. The fundamentals are just too strong. Home builders are fundamentally weak and getting weaker. Can’t do much about that even when you have the power of the printing press on your side.
>
I’m short TOL. Currently TOL is still predicting that 2006 will have more unit sales and higher prices/unit than 2005. Until TOL starts acknowledging that y-o-y comparisons are negative, I think there’s room for TOL to fall further.
It’s good to see their company spending money trying to buy back shares the brothers Toll are selling. When management does one thing and the company another, it’s best to be aligned with management (which in this case means sell along side them).
Also wondering whether or not technical trading/channel trading is part of the “PPT problem” on some HB stocks. To be sure, the buyback programs many HBs have engaged in don’t do us shorts any favors. These buybacks are not often talked about, but they are in the hundreds of millions of dollars, all told. And it’s not like they all have a lot of cash, either. Wonder why they aren’t just buying land and building houses with that money if things are so good.
Isn’t it ironic that the shares of the most obnoxious HB CEO (Bob “screw the shorts” Toll) are the ones to fall fastest and hardest? That’s why I loaded up on TOL puts. It’s the “Ken Lay factor” — too much protesting going on.
>> To be sure, the buyback programs many HBs have engaged in don’t do us shorts any favors.
Hmm that didn’t come out right. It should have said:
If you’re short, you should be happy about TOL’s buybacks. They’re converting the most valuable asset (cash) into an over-valued asset (TOL stock). Imagine that TOL periodically announced they were buying up to fifty-million dollar bills for between $1.30 and $1.40 each. You’d celebrate. If you (we) are short and correct about the over-valuation, that’s exactly what they keep announcing — that they’re willing to pay $1.30 for dollar bills.
If you (we) are short and correct about the over-valuation, that’s exactly what they keep announcing — that they’re willing to pay $1.30 for dollar bills.
______________
Yes, IF we are right (and, how could we not be?)
I just can’t fathom why the HBs would be so agressively buying shares when so many have HUGE debt, and not so much cash. Do they know something we don’t???
Personally, I think it’s the cash situation which will be many HBs demise. I *know* they have to see what’s coming. This is what they do for a living, and are quite sucessful at it. Really wish I worked in corporate for an HB right about now.
Toll said it expects to purchase shares “on an opportunistic basis.”
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Is it illegal for a company to go short its own stock?
# dawnal Says:
February 7th, 2006 at 7:39 am
Stock buybacks? A BRILLIANT strategy ! Just think how pleased all the shareholders are that management bought shares at $34.61. The loss of about 10% a few days after quarterend must thrill all involved !
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They stole a page out of Greenspan’s playbook…
Robert Coté Says:
February 7th, 2006 at 7:57 am
Even Dogcrap_Green has capitulated and admitted we have been right all along and the HBs are cratering.
————————————————————————–
Robert,
That is funny, but left me feeling clueless. Who is Dogcrap_Green?
toll bros 30.27
“Once this excess inventory clears the market, we expect that the fundamentals of constrained lot supplies and demographics-driven demand should return,” Toll said.
—————————————————————————-
He will be right, in the long run. But in the long run, we are all dead.
“We believe when expectations of home-price appreciation are strong, buyers are willing to wait a year or more for their homes,” Toll said. “When their expectations are more modest, they are less willing to commit so far in the future.”
No need to commit so far in the future; just get in with an I/O ARM, since you will always be able to refinance at a lower rate, or sell at a higher price later on.
dawnal Says:
February 7th, 2006 at 8:22 am
And unlike you, we recognize the reality of the PPT. But they can’t do much about the bubblers.
——————————————————————
Are you trying to elicit black helicopter straw-man characterizations from PPT skeptics, or something?
I just can’t fathom why the HBs would be so agressively buying shares when so many have HUGE debt, and not so much cash. Do they know something we don’t???
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Check out the movie “Enron — The Smartest Guys in the Room.” That will give you the picture.
Also wondering whether or not technical trading/channel trading is part of the “PPT problem” on some HB stocks. To be sure, the buyback programs many HBs have engaged in don’t do us shorts any favors.
——————————————————————–
Wait until the dust settles to decide. My opinion is that company buybacks of overvalued shares will eventually be extremely favorable to long-term-buy-and-hold shorts.
Housing Bear: Was there an article/post that analyzed the Centex sale regarding how successful it was (besides the one guy who thought he got $100K equity instantly)? I thought there were buyers that got sucked in.
PPT alert: TOL methadone treatment is underway with a new price floor of $30.20
http://tinyurl.com/bcmj9
>
A company doesn’t “short” its own stock. Like the government, they can print their own currency. So they issue new stock and sell it (say, a secondary public offering). One of Google’s best moves was to issue new stock as their share price was moving up; that gave them billions of dollars of cash which will be very useful moving forward.
Merrill Lynch is always looking out for its customers. Look at this:
“11:02am 02/07/06 Toll Brothers cut to neutral at Merrill Lynch - MarketWatch.com ”
The question does come up, I guess:
Why wait until the stock fell off before changing their outlook on TOL? Wouldn’t it have been more useful if they had done it last week? Gee, if the customers knew before the stock dropped, they could have sold and avoided a loss. But I guess ML just didn’t get around to checking TOL until after it fell. Sorry, customers.
Just for fun, someone ought to check ML as TOL keeps dropping. I wonder when they will suggest that their customers sell? Somewhere around $10, is my guess.
dawnal said: “Why wait until the stock fell off before changing their outlook on TOL? Wouldn’t it have been more useful if they had done it last week? Gee, if the customers knew before the stock dropped, they could have sold and avoided a loss.”
———-
And Merrill only cut the rating to “neutral”. Which doesn’t mean “sell”, it just means “don’t buy”. So they are still recommending to clients that own TOL to hang on to it. No doubt after TOL goes down another $10 Merrill will issue a “sell” rating.
OT, but just got an email from Sac Bee as follows:
Turn off the tube. Drop the rake. This Saturday is your chance to buy a Centex Home in almost any Centex Sacramento area neighborhood and save $50,000 to $150,000 on selected homes. New construction or one of our ready-to-move-in homes, it doesn’t matter. Next Saturday’s the day. 10 a.m. ‘til 10 p.m. is the time. Every sales office will be open in each of our participating neighborhoods.
Visit http://www.12HourSacramentoHomeSale.com for locations. So why not let the leaves blow into the neighbor’s yard? You’re gonna be moving anyway.
ELK GROVE
When it comes to inviting new home designs combined with exceptional neighborhoods, Centex Homes leads the way in Elk Grove. We now have two new neighborhoods in the region – each offering the quality, value and architectural flair that have made Centex a true favorite throughout the region. SERRANO - EL DORADO HILLS
With the Sierra Mountains in the background and city lights below, it’s no wonder Serrano is one of the region’s most sought after neighborhood settings. Our new LaCima neighborhood sits high atop Serrano and encompasses every aspect of the community’s natural beauty. And you’ll see that our inside spaces are just as stunning as the outside.
LINCOLN
Lincoln is a shining example of why South Placer County is the fastest growing area in the entire region. And whether you’re a first time buyer or looking for your million dollar dream home, you’ll find that no one offers more choice in Lincoln than Centex. Come choose your favorite new home from over 30 individual plans at 9 new Centex neighborhoods. WHITNEY RANCH - ROCKLIN
Every now and then a community comes along that changes everything. Whitney Ranch in the Rocklin foothills “is” such a place. What’s more, it’s home to Black Oak – our newest premier neighborhood of custom-caliber luxury homes. There’s never been a better place to reward your success.
“I just can’t fathom why the HBs would be so agressively buying shares when so many have HUGE debt, and not so much cash. Do they know something we don’t???”
Sure, Robert Toll wants the company to keep the share price up while he dumps more of his personal holdings. It’s tough on the company and other shareholders, but that’s not his concern.
As for the buybacks, my theory is that management is trying prop up the stock price long enough to finish unloading their own shares for as high a price as possible.
They will also get brownie points from the hedgies that they may need to cash in later when are looking for their next job.
Hey, lookie here:
http://www.marketwatch.com/tools/quotes/quotes.asp?addsymb=FED&symb=bzh+ctx+dhi+hov+len+phm+ryl+spf+tol+fnm+kbh+WLS+LEND&siteid=mktw&vc=1&x=8&y=5
All the bubblers are dropping off EXCEPT TOL, the one whose news probably caused today’s debacle among the bubblers. Look at the charts and notice that ONLY TOL is steady while the others are dropping. Hmm…
Any body check to see where the PPT is today?
Any bets on what happens near the end of the day? My guess is that TOL surges upward at the end of the day. What is your bet?
“Any bets on what happens near the end of the day? My guess is that TOL surges upward at the end of the day. What is your bet?”
I thought they might rally today, but maybe the 10 am spike was best they could do…too much momentum now, and they’re trending down again. There might be a stronger rally tomorrow, but they’re going to keep chopping their way down the charts from now on. They’re screwed.
Ha ha.
TOL is playing a shell game w/ stock buybacks
That is insiders dumped many shares in the last year, now they use shareholder funds to retire those shares…..tis a way crooked street (wall) the big boys play on
Please check your information on insider transactions - These are required by the SEC and failure to comply with the law is jail. Also the credibility of this site drops when statements on insider transactions are erroneously reported. Robert Toll is not stupid when he gets 40,000 shares for free he sells them, the company then buys shares on the open market to give as bonuses in subsequent years.
http://tinyurl.com/dxk7v
“Please check your information on insider transactions - These are required by the SEC and failure to comply with the law is jail.”
OK, just checked.
2005 Insider sells by the brothers Toll:
Bob Toll…………. $196,560,000
Robert Toll ………$265,610,000
Total……………..$462,170,00
Let’s see, the companies buying shares with the investors money, while the insiders selling their own shares.
Makes perfect sense to me. Their total combined take is well less that a 1/2 billion dollars. They have mouths to feed too, you know!
“Also the credibility of this site drops when statements on insider transactions are erroneously reported. Robert Toll is not stupid when he gets 40,000 shares for free he sells them”
We’re well aware, thank. We’re speaking loosely on the net, we’re not composing legal documents.
And as someone once said, there are many reasons for insider selling, but the expectation that share prices will go up isn’t one of them.
Opps, total = $462,170,000, that’s four hundred sixty two million, one hundred seventy thousand and 00/100s dollars.
dawnal Says:
February 7th, 2006 at 10:04 am
Hey, lookie here:
Funny, dawnal, my screen shows TOL down 4.8%. Do you think my computer is broken?
# backtocash Says:
February 7th, 2006 at 10:20 am
TOL is playing a shell game w/ stock buybacks
That is insiders dumped many shares in the last year, now they use shareholder funds to retire those shares
———————————————————————
I guess Robert Toll missed the Enron trial now underway.
xazp says…
“A company doesn’t “short” its own stock. Like the government, they can print their own currency. So they issue new stock and sell it (say, a secondary public offering). One of Google’s best moves was to issue new stock as their share price was moving up; that gave them billions of dollars of cash which will be very useful moving forward.”
Good point. They also used a stock split last year to manipulate public perceptions in a bullish direction while the big boys “diversified” by cashing in their chips.
But my question remains: “Doesn’t” or “Can’t”?