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A Sea of Red

  • January 25, 2006

For the first time today when I glanced at my list of homebuilder stocks, every single one of them was in the red. The stock of Ryland Group (RYL) fell as much as 6.41% and it had plenty of company. Hovnanian Enterprises (HOV) fell 3.4% and Meritage Homes (MTH) shared its agony with a 2.7% drop. The interesting thing about all these stocks is that each of them has a single digit P/E and their Price/Sales is less than 1. Clearly the housing bubble has either burst or is slowly deflating. To view a list of 12 homebuilders, check out the September InsideArbitrage.

On a different note, Ameritrade (AMTD) paid out the $6 per share special dividend today after completing the acquisition of TD Waterhouse. Makes me wish that I had bought more of Ameritrade back in April 2005 when I started a small position at $10.99. Given the high level of interest in the Chipotle IPO, Chipotle bumped up the price range per share from $15.50 – $17.50 to $18 – $20. This is going to be a very spicy IPO indeed.