Amit Chokshi

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MDC Holdings Trades Below Book Value

Sorry for not clarifying, I meant that don't most eventually trade under book value during economic downturns? If you look at TOL back in the Dec99-Mar00, it hit low P/B of .95x. Also, referencing MDC, just looking at its historical P/B multiples, from 93-97 the stock barely traded above .7x book value and in some years hit BV values of of below .5x. It also traded for as low as .7x book value in 2000. I'm not the strongest mean regression advocate but .97x book value doesn't appear to offer much value for MDC based on historical values. Also, MDC really only traded at over 2.0x BV in the hot markets of 2004-2005, it's safe to say that that won't happen again too soon so even assuming everything normalizes, MDC is really a 1.2-1.5x bv stock, not a ton of upside. So I guess I'd agree with your first statement about it being premature to buy homebuilders.
Sep 18 14:54 pm |Rating: 0 0 |Link to Comment |View article
MDC Holdings Trades Below Book Value

Doesn't a variety of homebuilders trade below book value as economic cycles turn downward? In MDC's case, I'd suspect that the "higher beta" areas for where they primarily develop homes - MD, northern VA, Phoenix, Vegas, parts of Florida would be the reason the stock trades below book value.
Sep 17 11:43 am |Rating: 0 0 |Link to Comment |View article

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Amit Chokshi

Comment Stream » MDC

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MDC Holdings Trades Below Book Value

MDC Holdings Trades Below Book Value

Amit Chokshi's Comments Stream Stats

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