Wednesday, October 24, 2018

Beazer, Again

I appear to have an on-again off-again relationship with Beazer Homes because it's price is so darn volatile. As previously discussed, I've bought and sold this one in the past. Now that the price has tanked once more (its down about 60% over the last year), I'm back in.

I don't really have much to say in addition to what I've already said, so I'll just refer you to an article from two years ago which sums up my thoughts on the situation. It's amazing how little has changed with respect to the company in that time, and yet the stock price has gyrated wildly between $7 and $22. If I just copied and pasted that article here and updated the numbers a little bit, no one would really know the difference.

Here's hoping the stock price continues to swing, either so I can buy more or so I can get out.

Disclosure: Author has a long position in shares of BZH


Anonymous said...

Thanks for the mention, a worthy name to look into. When you mentioned it 2.5 years ago, you noted that mgmt was committed to delevering by less development activity. Have they been consistent in that? I see that inventories in the MRQ were slightly higher than the same quarter 2 years ago. They have paid off about 7% of their debt since then.

Anonymous said...

I'm looking at the notes as at present they are the fulcrum security within the stack and you can get 9.2% to maturity for a 6.4 year term on the 2025s. They started the year trading at $105 and are now at $88.

One thing I would like to note is that the co has a section 382 plan which is now scheduled to expire 11/2019. This has likely been deterring any potential buyers. The plan could likely be extended as BZH still has big NOLs ($195 mil in tax assets at 6/30/18, I believe $600 mil or so of federal NOL carryforwards). And it's important to keep in mind that these tax assets are a substantial portion of book value, and wouldn't be retained by a buyer.

Saj Karsan said...

Thanks, Brian.

I think part of the "de-leveraging" is relative to EBITDA, so to the extent they can grow faster than they accrue debt, they'll be happy.

Yeah I think the debt is interesting as well.

The tax assets due to NOLs are definitely an important part of book value.