Do you know which homebuilders Bill Miller has been buying? Some of them have seen serious erosion in their cash positions as a result of stock buybacks and land acquisition.
Centex, for example, has gone from over $500 million in cash on hand to just over $47 million from March 2005 to March 2006. Centex is also the only four-star rated home builder by S&P.
MDC Holdings has seen their cash position cut in half. Standard Pacific went from $151 million to $29 million.
Of course that doesn’t mean all of the homebuilders have frittered away their cash.
Personally, the homebuilders are a battleground I’d rather avoid. With shrinking earnings, those small P/E’s aren’t going to look so small a couple of quarters down the road. There’s probably also going to be some balance sheet writedowns as land prices decrease. On the short side, it looks pretty crowded.
