Bankrupt Homebuilders

I am still adamant that I think we are going to have at least one major homebuilder go bankrupt and have continually said the time to buy is around the bankruptcy because I think that will mark the ultimate blood flowing in the streets. With that I said I have been thinking about inching into a homebuilder (which will go unnamed for now) when my fund opens and maybe pair by shorting (probably buying some puts) on another that I think may go bankrupt. You can never call bottoms and do not claim to be any better than anyone else and I do not want to be to late. My guess is three to five years from now select investments in homebuilding companies that support homebuilders will be very lucrative. I just want to make sure and have plenty of dry powder after my initial investment.

Couple of links talking about the potential of homebuilder bankruptcies and a few quotes below that. Homes selling for $.64 on the dollar....

http://www.bloomberg.com/apps/news?pid=20601109&sid=aUiIJ0tcL_OQ&refer=home
http://www.247wallst.com/2007/10/will-one-of-the.html

If fall-off is any indication, Beazer and Standard Pacific are the most likely homebuilders to file for bankruptcy. While shares in most of the larger companies in the sector are off about 40% over the last year, shares in these two firms are down closer to 80%.

If you look at the 2000 bubble (This housing thing is just another bubble, nothing new or different) the S&P was down something like 55% and the NASDAQ like 85%. (Not going back and checking these numbers just from my memory so may vary) Anyway an average of 40% is another indicator we may not have found a floor just yet.

``I ran the numbers and the condos sold for between 68 cents and 74 cents on the dollar based on the original asking prices,'' Moran said.

Try to buy stocks at a 50% discount. Is 68% discount enough to buy actual real estate???
Fifty-two percent of builders said they cut prices in August, compared with 19 percent in September 2005, the builders group said. The typical incentive was worth about $5,000 and the median price reduction was about 5 percent, said Stephen Melman, director of economic services for the builders association.