Reggie's researchWednesday, 12 December 2007 | Reggie MiddletonI have decided to keep pumping as much of my preliminary research as possible to the blog for free. Please read and accept the disclaimer below. In addition to the disclaimer, I want to add that this... + Full Story
The next GGP??? A timely actionable noteFriday, 14 November 2008 | Reggie Middleton The hard core fundamental anlalysis of this blog has been paying off in spades for many subscribers - creating real wealth, preseving significant wealth, and actually creating bonuses for Wall... + Full Story
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This topic was brought up September of last year, one of the first posts of this blog - The Performance of Centex's Mortgage Origination. The mortgage origination units of the builders are not getting enough attention, and they are significant drags on performance (as if this group needs any more of that) as well as dangerous liabilities on the balance, and often off balance sheet as well. There may be some very turbulent and adverse price action as the shares of Centex have surged with the "bear market sucker;s rally" and are at levels that can in no way be justified by valuations.
The latest quarters results were pretty bad, but the media didn't catch all that there is to tell... From Bloomberg.com:
Centex Loss Widens as Slump, Lending Woes Cut Demand (Update1)
After reading the 10Q that was just released a few hours ago... written by Reggie Middleton,
February 06, 2008
I see that the mortgage assets look like they have not been marked to market. In addition, I am always skeptical about the realism of the asset mark downs since there is no uniform way to go about it - it is left up to management's discretion. Despite all of this they have taken a $14.32 loss per share, with a share price currently around $27, but it just came down from $30 a few days ago.
They have 61,872 in cash, that is trying to service Loss on Joint Ventures and Unconsolidated Subsidiaries amounted to $125,333,000. Provision for Losses on Mortgage Loans Held for Investment and Construction Loans was $82,775,000 (like I pointed out in the post above). The few assets they did get to sell were underwater: Gain on Sale of Assets - negative $16,966,000 Increase in Receivables: $173,062,000 (bad debt on the books) Increase in Accounts Payable and Accrued Liabilities: $449,651,000 JV's are still soaking up valuable cash - Investment in and Advances to Joint Ventures: $160,877,000 Centex is issuing $30,000,000 more in debt to financial services than it is paying down, most likely in an attempt to get a handle on all of those bad mortgages that it can't get rid of.
Capitalized Interest Charged to Home Building?s Costs and Expenses: $69,854,000. This quarterly interest charge is more than their cash on hand. Cash Paid for Interest: $65,318,000
Mortgage Loans Receivable, net: $747,757,000 these guys even funded construction loans themselves, which is a disaster: As of December 31, 2007, Financial Services is committed, under existing construction loan agreements, to fund $74.4 million in addition to the construction loan balance shown above. Financial Services has ceased origination of new construction loans; however, it will fulfill its existing funding commitments.
I'll continue this later...
+1
... written by eh,
February 06, 2008
"There's too much existing home inventory on the market to prevent any sort of significant increase in the pace of housing starts,"...
This sentence does not make sense; do you have a link for it?
CTX seems like a bankruptcy risk, if not in 2008 then in 2009.
I'd be interested in your view on SPF, since bankruptcy rumors enveloped them last year but the market had a positive reaction to the most recent report; in fact, SPF shares have more than tripled off lows at this point.
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They have 61,872 in cash, that is trying to service
Loss on Joint Ventures and Unconsolidated Subsidiaries amounted to $125,333,000.
Provision for Losses on Mortgage Loans Held for Investment and Construction Loans was $82,775,000 (like I pointed out in the post above).
The few assets they did get to sell were underwater: Gain on Sale of Assets - negative $16,966,000
Increase in Receivables: $173,062,000 (bad debt on the books)
Increase in Accounts Payable and Accrued Liabilities: $449,651,000
JV's are still soaking up valuable cash - Investment in and Advances to Joint Ventures: $160,877,000
Centex is issuing $30,000,000 more in debt to financial services than it is paying down, most likely in an attempt to get a handle on all of those bad mortgages that it can't get rid of.
Capitalized Interest Charged to Home Building?s Costs and Expenses: $69,854,000. This quarterly interest charge is more than their cash on hand.
Cash Paid for Interest: $65,318,000
Mortgage Loans Receivable, net: $747,757,000
these guys even funded construction loans themselves, which is a disaster: As of December 31, 2007, Financial Services is committed, under existing construction loan agreements, to fund $74.4 million in addition to the construction loan balance shown above. Financial Services has ceased origination of new construction loans; however, it will fulfill its existing funding commitments.
I'll continue this later...