I sold LGIH.
There will be head winds across Texas for the rest of the year.
Labor and materials
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Yeah, I sold my shares, too. I know Saul kept his position, but to paraphrase what he has said about other companies in the past… and a lesson I have taken to heart… if there are flags or doubts about a company, there are other good places to put your money. I realize the doubts or flags are not proven at this point. But I do believe we have not seen the worst of this storm in terms of the devastation it is going to leave in its wake. A devastation that is going to impact local businesses. I realize that LGIH has just a few communities it is building in the affected areas, but that is enough for me to take a step back for now. I am up 40% on my shares and would rather sell now and buy back in at a lower or higher price once we can be sure of what the impact of the storm will be.
A side note… watching the devastation to the people there is heart-breaking.
Vivienne
I actually bought some shares today at $41.50. I had lightened some in the upper 40’s. Price today was a bargain IMO. It may go lower but I’m comfortable at that price and see big upside if the closings reported for August are very good. Don’t forget, this isn’t Katrina. I lived through that nightmare in NOLA. Water was there for several weeks. This water will be there and gone quickly in Houston. Rebuilding will begin rapidly. Might create some short term labor/supply issues/costs but that will be temporary. As long as there aren’t total losses in their selling communities I don’t see the drag on shares lasting long. I’d buy again if it goes to the 30’s which would put the P/E at 10.
MC
4 Likes
I sold out today too, but I was more or less waiting for some excuse.
What really set my radar to quiver on LGIH, was checking in with the BBB. While they somehow have decent ratings, they have a lot of really nasty comments from clients and prospective clients at BBB. After reading a few dozen comments, some good, most bad, it was obvious, at least to me, that LGIH sales tactics are very high pressure. Several people mentioned that within 5 minutes of meeting one of their agents, clients were already 98% profiled, and pressured to buy, some before they had even seen a model home. More than one said that when they couldn’t guarantee they were ready to buy that day they were chastised and more or less shown the door.
It’s obviously a seller’s market in many of their locations, but I’d rather own a company that is building for the future AND gaining sales today, rather than one who is all out to make hay while the sun shines and leave the future to someone else.
It could be a case of the left hand not knowing what the right hand is doing when they aren’t around to keep them in line, but that scenario doesn’t strike me as much more positive than if these tactics were part of the official game plan. It’s their job to know what the sales team is doing and the impressions they are making.
At least that’s the way I see it.
Dan
11 Likes
After reading a few dozen comments, some good, most bad, it was obvious, at least to me, that LGIH sales tactics are very high pressure.
Keep in mind that people rarely go to the BBB unless they are feeling cheated. I wouldn’t expect to find many good comments there. That’s not to say we shouldn’t pay attention to the bad ones tho.
I sold about 75% of my position. Still like the stock for the long term, but I don’t want too big a position right now with all the unknowns.
I reallocated to other high flyers such as Shopify. I might add more later after things settle down.
I do have a small position in Home Depot already–wonder if I should buy some more due to the needs Texas will have in the coming months.
David
1 Like
I reallocated to other high flyers such as Shopify
Do you REALLY consider LGIH a high flyer with a PE of 11?
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Do you REALLY consider LGIH a high flyer with a PE of 11?
Traditionally homebuilders traded around 10 PE multiples. Of course, LGIH is growing much faster than traditional homebuilders.
What percentage, if any, of the LGIH land bank is currently underwater and therefore not likely to be considered viable for houses in future?
I don’t know. I am not sure whether some property submerged in this rain, and the storm would make it unviable for housing in future.
It looks to me like everything from Victoria Texas to Lake Charles Louisanna will fit that description next week.
Oh. And the models show another low in the western Gulf.
Cheers
Qazulight (After Ike I moved a 125 miles inland and on top of a hill. And I am moving again to Sioux City, but my house will be a 100 feet above the river.)
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