NYT: Home Builders' Stock Sales: Diversifying or Bailing Out? (bailing!)

[highplainsdem]

http://www.nytimes.com/2005/10/04/business/04builders.html?adxnnl=1&adxnnlx=1128430865-MJCzpUtmfNio+laC7MgLEA


Home Builders' Stock Sales: Diversifying or Bailing Out?
By JULIE CRESWELL
Published: October 4, 2005

Home builders have never had it so good. Low interest rates and creative financing have caused a frenetic pace of new-home construction across the country. Builders are reporting blistering earnings and their shares are trading at or near record highs.

Now they are cashing in. Executives and directors at many of the nation's largest development companies sold stock at a record pace this summer. Insiders at the 10 largest home builders by market value, including D. R. Horton, KB Home, Toll Brothers and M.D.C. Holdings, have sold nearly 11 million shares, worth $952 million, so far this year. That is a huge jump from the 6.8 million shares, worth $658 million, that insiders sold during all of last year, according to data compiled by Thomson Financial.

Market specialists often view heavy stock sales by corporate insiders as a possible indicator that share prices are headed lower. Some analysts say that the share sales by home builders are reminiscent of the heavy dumping of stock by technology company executives just before the technology bubble burst in 2000. For that reason, the staggering level of insider sales has analysts and investors wondering if home builders see something menacing on the horizon, like a cooling of the real estate market.

Home builders say the stock sales are not a signal that they believe the property boom is waning. Instead, most executives said that they were selling because they needed to diversify their personal wealth. Some outsiders are not so sure.

<snip>

[Richard Steele]

1. If they say it's just "diversification", they are NOT denying the bubble!

QUOTE:
"... most executives said that they were selling
because they needed to diversify their personal wealth.
Some outsiders are not so sure."

Correct me if I'm wrong,
but isn't the entire POINT of "diversification"
to protect yourself against losses?

Some insider sales happen every year;
these reflect the NORMAL level of "diversification",
combined with the normal number of folks selling just for the cash.

This year, those sales have already JUMPED almost 100%.
Looks like the folks in the best position
to judge the stocks' health have decided
that the best way to "protect against losses"
is to dump the stocks.

[highplainsdem]

2. Very good point!

[acmejack]

3. Bailing!

It is soon to come undone, as suburban & bedroom communities become a prohibitively expensive commute.

Of course, if I actually knew what I was talking about I would be a rich con. In actuality, I would merely be rich. It would require a personality transplant to make me into a republicon.

[qanda]

4. The new code word for this is.....

FRIST!!!!!!

[highplainsdem]

5. kick