Saturday, January 10, 2009

Homebuilder Lennar accused of fraud

Lennar's stock fell 20% on Friday, due to the fraud allegations.

Hat tip: The Hot Property blog


  1. Seems like grasping a little bit. I mean, all this is is one guy with a camera and a fancy logo indicating he is with the "fraud recovery institute". I am just a regular guy - yet I could easily set up a video like this. Will you devote a blog entry to what I have to say.

    I absolutely believe there could be (and probably was) a decent amount of fraud by the homebuilders. However, I would hate to think that just because I said it was so, you would devote a blog entry before doing a bit of due diligence yourself

  2. I made it through 54 seconds of the video before I shut it off. What's with all the shifting back and forth? What's with the cheesy shirt? The guy is amateurish, unconvincing, and thus not worth my time.

  3. I checked and Fairfax County's realty has dropped 33.8% since 2005's peak. The median sale's price for 2008 is $320,000 compared to $194,000 for 1998. Now if you follow Case's principle (of Case and Shiller index) of 2 to 3% above inflation annual appreciation for residential real estate that means prices are at the right "value" based on a 5% price growth per year.

    $194,000 x (1.05)^10 = $316,000

  4. Individual houses increase at the rate of inflation, not 3% above the rate of inflation. That's what Shiller says, and that's what the data says.

  5. Anonymous said...
    "Will you devote a blog entry to what I have to say."

    If you can cause a company's stock to fall 20% in a day, then yes I will. If not, then no.

  6. We are in a period of pretty marked deflation. I think you FFcounty home should get much closer to it's 1998 price. Then, once hyperinflation kicks in from all of this fed money printing, it will shoot to $2 million...

  7. Did this guys statement cause the stock to drop 20%? I certainly dont think this guy caused that...

  8. Anonymous said...
    "Did this guys statement cause the stock to drop 20%? I certainly dont think this guy caused that..."

    Don't take my word for it, here's what The Wall Street Journal said on Friday:

    The options market played host to rampant trading in Lennar Corp. after an organization aimed at detecting financial fraud accused the home builder of improperly boosting cash on its balance sheet.

    Activity in Lennar options skyrocketed to 31 times the normal level, with traders picking up 31,000 calls that allow them to buy the company's stock and 81,000 puts that allow them to sell it, according to Trade Alert.

    Early in the session, traders flocked to near-term puts as shares in the Miami company dropped nearly 30%. Prompting the decline was a report by the Fraud Discovery Institute, which accused Lennar of "multiple alleged fraudulent activities."

    The institute was co-founded by Barry Minkow, who served several years in prison for stock fraud.

  9. Home builders committing fraud....SHOCKING!

    Have any of you seen the quality of the POS McMansions that are being made my K Hovanian, KB, etc?

    They are shit. And these are homes that you will find for $700K+ in places like Porter Ranch, CA.