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I know I said I would have the Lennar report by last weekend, but it has been a monumental task to sift through the mish-mash that was passing as disclosure. I will probably post it tomorrow, or the day after. Here is a sneak peak of what I will focus on.

I have been a little critical of the ratings agencies, and I don't think I have been unfair. Look below to see what I think this formerly investment grade company should have been rated since '05, after consolidating JV's and off balance sheet debt. I know many will say non-recourse this, minority ownership that, blah, blah, blah. Listen, if you are going to book the profits from a vehicle, you should book the liability from said vehicle too. It's real simple. If you can take loss from investment in, or debt towards, a vehicle, it should be reported. I guess those smartest guys in the room at Enron taught the rating agency guys and sell side analyst community very little. Hey, what do I know, I am just a lone, unknown Internet blogger.

Fully Consolidated Bankruptcy Scoring, Including Off Balance Sheet Vehicles
 200520062007E2008E
Z-score ( Including JV's )          2.50           2.18           1.59           1.48
Reggie's Debt ratingCCC CCC CC CC 

Remember, a score of 1.8 or lower indicates a 72% probability of bankruptcy in 8 quarters.

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Now, even as an unconsolidated, standalone entity, Lennar does not look like a good credit risk. Fully consolidated, it is time to pull debt our of Lennar before its too late. Remember, nearly a billion dollars of off balance sheet debt is full recourse, a quarter billion of off balance sheet debt is recourse through reimbursement agreements, $676 million in joint and several recourse off balance sheet debt, plus of course $3.7 billion in non-recourse debt, odd balance sheet. Then there is $2.5 billion in on balance sheet long term debt. Keep in mind that this company's revenues are forecast to be about $6.7 billion (with nearly a billion dollars in annual losses) and its equity market is only $2.7 billion. Despite that, momentum traders have turned this into a commoditized trading vehicle that ignores the fundamentals - pushing the stock up significantly over the last two days, if fundamentals ever came into play to begin with. These guys are trading about $2 worth of debt for every $1 of stock they buy and sell.

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Much, much more to follow. See also Lennar Comes Clean! $5.5 billion of off balance sheet debt