Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Lunch Money



With the concept of a "housing bubble" having become a daily mantra in the popular media, and having been all but blessed even by our fearless Elmer, one must wonder when the weaker speculators will start getting cold feet and start jettisoning their "flipping" inventory. The insiders at Hovnanian Enterprises (HOV) don't seem to want to take any chances as to when the whole kit and caboodle will come tumbling down, and at 5:10 p.m. Friday afternoon (nice), filed a registration for a shelf offering of $500M of debt securities and 15.2M shares of Class A common to be sold by the controlling shareholders. As a "conspiracy theory addict," I must point out the following:

HOV is just coming off reporting a quarter where it had some 'splaining to do as to whether it missed or did not and whether it guided down or not.

Click here for an excerpt from the S-3 filing detailing the sources and end result of the shares being sold.

Bottom line, these shareholders not only are selling all of their Class A shares, but they are also converting some of the Class B stock to Class A and punting it as well. After these sales are completed - almost $1 billion dollars worth of them at today's prices - their holdings will have been cut by more than 50%. The remaining holdings may not include options still held, and that probably continue to accrue, and, naturally, the sale of these shares has not yet taken place.

Strictly as a "mechanical issue" the sale will increase the existing "float" by approximately 38%, enough that one should consider the consequences on the future volatility of the stock and the availability of "borrow" for short-selling.

Let's make a date to revisit this sale in a couple of years and let's see how good - or bad - was the insiders' timing.

< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos