Buffett Rumors Bogus

Well, of course, we can’t say that for sure.

But every time I get trapped in a losing position I trot out the Buffett rumor. the funny thing is, my friends never bite.

Hovnanian Enterprises Inc. shares jumped the most since December 2004, leading homebuilders higher, on speculation Warren Buffett’s Berkshire Hathaway Inc. may buy a stake in the company.

``There’s talk that Warren Buffett wanted to buy a stake,’’ said Justin Wiggs, a trader at Stifel Nicolaus & Co. in Baltimore. ``People are extrapolating that Warren Buffett could be trying to call the bottom of the homebuilder stocks.’’

Where there is smoke there is fire. But oftentimes Buffett’s sidekick Lou Simpson is behind the rumors.

The 2004 Berkshire annual report explains that GEICO’s Lou Simpson, an astute investor in his own right, manages approximately $3 billion with Buffet’s blessing. And it appears he has the authority or wherewithal to establish positions up to the $300 million mark… 1440 Wall Street

Late last year there were several “bust the shorts” calls to arms on the builders. It did not happen.  But they certainly got a little jiggy today, with 15 of 16 homebuilding issues trading higher.

Still, not everybody is buying it…

``It’s just another junk rumor on a Friday,’’ said Greg Palmer, head of equity trading at Pacific Crest Securities Inc. in Portland, Oregon. ``But if you put a big name to it then away you go.’

The only homebuilding stock truly trading at trough valuations is Beazer Homes (BZH-NYSE) which has seen an ongoing federal investigation pummel its valuation harder than its peers. Still, signs of intellligent life are showing up on the shareholder rolls, evidenced by Moore Capital’s filing on Beazer earlier this week. 

Although the stocks are certainly nearing a point, valuation wise, where you should kick the tires, it seems a mite early to plunge in with both hands. And the only thing we can say with 100% conviction is that the casino will re-open.

9:30AM Monday

Hovnanian Surges on Speculation Buffett May Buy Stake
Bloomberg

Buffett is Buying!!!!!!
10/31/06
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The content contained represent the opinions of1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position in securities mentioned

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