you are correct about earnings. Just read article somewhere that during 90s downturn some builders went without profit and Price/Book bottomed at 0.5-0.7 ratio.
Of course book values may be under/overstated now with land costs on books, so thats where your Marty Whitman types (Third Avenue Value fund manager) come in.
About CFC, have you read interviews with their CEO mozilo? heres an old ione in Businessweek Mar 06,
“How severe are the price declines you are expecting?
MOZILO: I would expect a general decline of 5% to 10% throughout the country, some areas 20%. And in areas where you have had heavy speculation, you could have 30%. We will see…sellers back off from the prices they have been demanding. A year or a year and half from now, you will have seen a slow deterioration of home values and a substantial deterioration in those areas where there has been speculative excess.”
Admitting there is a bubble one would think that he would have protected his company. However, it appears he has either sold half or all his stock for $6M in May/June 06. [Someone please confirm.] Looks like he sees no upside!!
