Billionaire Ken Griffin Likes Homebuilder KB Home

Page 1 of 2

CITADEL INVESTMENT GROUPOur database of 13F filings shows that at the beginning of October Citadel Investment Group, a large hedge fund managed by billionaire Ken Griffin, owned about 540,000 shares of KB Home (NYSE:KBH), a $1.2 billion market cap homebuilder which is concentrated on the Sunbelt and a few other fast-growing states. A recent 13G filing shows that the fund’s position has since increased, to 3.7 million shares, so we can see that Citadel has been active in buying the stock recently. Check out more of Griffin’s stock picks.

KB Home’s fiscal year ended in November 2012, and the company has just released its report for the year as well as for the fourth fiscal quarter. For the year, revenue was up 19% from fiscal year 2011and though earnings were negative the company’s net loss was only a third of what it had been in the previous fiscal year. The fourth quarter saw high sales, likely due to seasonal factors, and profits; however, KB Home had actually had higher earnings in the fourth quarter of the last fiscal year.

Wall Street analysts seem to believe that continued strength in the housing market will help KB Home continue to improve its bottom line. Consensus has the company breaking into the black in the current fiscal year ending in November 2013, with 12 cents in EPS expected for the year. That generates a very high current-year P/E, but the sell-side then expects even better numbers on a forward basis and so the forward P/E multiple is 14. If the company does meet that trajectory, it wouldn’t need to continue growing much from that point; of course, there’s good reason to doubt that analyst forecasts will turn out to be right. A number of investors apparently don’t believe in KB Home’s prospects: 42% of the outstanding shares were held short as of the most recent data, despite the fact that the stock price has more than doubled in the last year as the market sees at least something of a housing recovery. Of course, buying a homebuilder does carry considerable macro risk as well, as demonstrated by the beta of 2.2.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!