Our Investment Philosophy

 We travel constantly all over the country visiting hundreds of  homebuilding communities every year and meet with industry executives,  community sales people, land brokers, field management, real estate  brokers, subcontractors, and other local industry experts who contribute  to our research process.  Our main goal is to provide clients unique reports, data and insights  which give them an edge.  

Since 2006 we have visited the  top homebuilding markets and have written insightful market tour reports  that provide an insight on current market conditions as well as a  historical backdrop and what is likely to happen in the future. This  helps clients understand which builder will outperform vs. who will  underperform.    

 Given our unique perspective and wealth of data we collect, we are  able to provide unique perspective and insights into what is going on in  the housing market in real time.

We have successfully predicted every major inflection point in the  housing cycle over the last 21 years and have helped clients invest with  confidence and conviction by understanding key trends before they  become well understood in the market place.  

We track existing home sale data in most of the key US housing  markets to forecast national stats each month:  Sales, Prices,  Inventories, Pending Home Sales, etc.

This helps clients trade around macro data points.  

 We have data sets going back 50 years where we track many macro data points that affect builders including:

Housing Market Index
Starts and Permits
Permits by MSA – Annual and Monthly stats
Existing Home Sales
Pending Home Sales
New Home Sales
Case Shiller Price Index
Macro Economic Indicators
Interest Rates
Population and Demographic Trends
Employment and Unemployment by State  

 Since 2007 our community pricing database has tracked every public  builder community and the base prices of every model type sold within  each community. This helps clients understand pricing and geographic  exposure and how it changes over time. This can be used to determine  market share, price point served, and to see who is growing and changing  prices the most.       

 Detailed Company Models – We keep detailed excel  models on every company we cover that go back many years typically to  the company’s IPO.  They have historically helped us accurately forecast  orders, revenues and EPS.  

Earnings Previews – A week before each company reports  earnings, we provide clients with a comprehensive  earnings preview.   This helps clients prepare with what to expect and how to position to  profit once the earnings come out.

Earnings Analysis – After the earnings come out we  follow up with a quick analysis of what happened to orders, margins,  deliveries, prices, margins and EPS.  

Conference Call Take-aways – Following the conference  call, we follow up with additional insights that came out of the  conference call and what clients can expect in the future.   

Actionable Recommendations – We reassess our ratings  every quarter. We provide clear actionable recommendations that  historically have helped clients make money. An upgrade to BUY means  Buy/cover. A downgrade to SELL means sell/short.

Proven Track Record - HRC has a longstanding track  record of accurately forecasting orders, revenues and EPS, and the  direction of the stocks we follow. We have a track record that is  unmatched in the industry which can be provided upon request.  

 Proven Valuation Methodology – HRC has a proprietary  approach to assessing fair value price targets. We set price targets and  ranges to gauge upside. We use this disciplined approach to put BUY and  SELL recommendations.

Our HB Mega Comp Table compares builders across various metrics across time. This goes back several decades.
This allows clients to quickly compare and contrast builders across any metric or ratio possible.
Ultimately we derive proprietary price targets and recommendations.
These give clients actionable ideas as well as upside vs. downside potential.

Homebuilders differentiate themselves and compete based on various  factors.  We can capitalize on the dispersion created by these  differences to pick winners and losers.

For example:
Land strategy – long vs. short, own vs. option, develop vs. buy finished lots.
Geographic concentration – diversified nationwide vs. concentrated regionally.
Price point and Product type – entry level, move-up, luxury and active adult.
Design and Choice – cookie cutter “all included” specs vs. build to order “custom” production homes.