Lennar Prepares An 8K Spread For Investors But It Is Not Enough To Quiet Critics
3 pages
Published by
associate5
Copyright :
All rights reserved
Disclosure is taking a higher profile at Lennar, Inc.
, one of the nation s most
prominent homebuilders.
Analysis of LEN s recent 8K supplemental SEC filing reveals
much more about the company s financial condition than was often the...
[More]
Disclosure is taking a higher profile at Lennar, Inc.
, one of the nation s most
prominent homebuilders.
Analysis of LEN s recent 8K supplemental SEC filing reveals
much more about the company s financial condition than was often the case in the
past.
Los Angeles, CA, April 17, 2009 -- Disclosure is taking a higher profile at Lennar,
Inc.
(NYSE:LEN), one of the nation s most prominent homebuilders.
An analysis of
LEN s recent 8K supplemental SEC filing dated March 31, 2009 reveals much more
about the company s financial condition than was often the case in the past.
Disclosing more, hiding less?
According to Chris McConnell AIFA, of Chris McConnell & Associates /
FiduciaryFORENSICS®, an LA-based fiduciary forensics consultancy
( http://fiduciaryforensics.
blogspot.
com/ ), kudos are due LEN s board and
management in issuing the 8K, for listening to its critics and recognizing that it
alone controls and decides whether to increase the flow of information needed to
respond to analysts and investors concerns.
Lennar has decided to be proactive in an attempt to disclose more and hide less.
Seemingly detailed disclosures appeared in the 8K, a 20-page PowerPoint-like
document, packed with new Joint Venture information, but there may be a bit less
here than meets the eye.
Clues and cues
Markets look for the presence, absence and change in signals from management,
especially in a leadership vacuum.
Within its theater of operations, management
must recognize and assume total command of at least two elements of investor
communication: 1) Information that positively stimulates a stock price, e.
g.
,
promising new developments, new sales, and other indications the company is
performing well, and 2) The opposite, more controllable and vastly more important:
removing or addressing concerns, obstacles, hurdles and impediments to enhance
investors collective comfort level and understanding of the company.
A brief analysis of LEN s recent 8K disclosures ( http://sn.
im/lennar-prepares-8kspread ) includes a sea of details but many unanswered concerns regarding the
potential for off balance sheet debt to inundate a shrinking balance sheet.
Tables
in the document show LEN s management took early proactive measures to protect its
balance sheet and shareholders; LEN provided disclosure of the accounting
treatment, sample loan language and code of conduct with its JVs, and mentioned
that LEN s internal audit unit monitors its compliance with fiduciary duties.
The
JV tables show 7 of the top 10 are "land" deals, 6 of 10 are located in Southern
California, 7 of 10 are 2004/5 vintage deals, yet only 4 of 10 reveal recourse debt
data, and the source of near 70% of LEN s $474 Million in exposure to potential
recourse debt is still hidden.
Investors are still waiting to asses issues for both on and off balance sheet items
such as the nature, timing, consistency, extent and method of valuation
adjustments, if any; the present and future compared to the past.
LEN s share price reflects some additional investors concerns
LEN recent share price as of April 9, 2009 of $8.
18 is only slightly above cash per
share of $6.
80; LEN is second from bottom in an eight-company* industry survey
where the average share price is 145% of cash per share.
LEN s share price reflects
a 50% discount to book value of $16.
34, and ranks lowest in the industry by a wide
margin.
[Less]
Insert a miniCalaméo on your website or your blog
