Colin Barr of Fortune recently published an article on the homebuilders that mentioned some of Bespoke's work. Click here to view the entire article. Below we provide an excerpt with Bespoke's input:
"Stocks are predictive of the industry about six to nine months ahead of time," says Justin Walters of Bespoke Investment Group in Harrison, N.Y. He says he is bullish on the sector, noting that house-price futures at the Chicago Mercantile Exchange have been forecasting a bottom in house prices in many U.S. markets toward the end of 2008.
Walters says the recent rally in the homebuilders stands out from past stock moves because volume has been so much heavier. He adds that this year's bounce in the homebuilders follows a pattern laid out in the collapse of the tech bubble back in 2000. Walters says the steep decline in these stocks - despite the recent rally, the XHB is down 48% from a year ago - has made the sector look attractive even if more declines are ahead for housing prices.
Perhaps the most bullish signal comes from the executive suites at homebuilders such as Hovnanian. In a recent post on the Bespoke Investment Group Web site, Walters and colleague Paul Hickey note that a few homebuilder insiders have started buying their own stock - a marked contrast to the heavy insider selling at marquee names such as Toll Brothers that marked the group's 2005 top.
"While some may argue that that homebuilders don't do a very good job building houses," Hickey and Walters write, "one thing they know how to do well is trade their own stocks."