Screaming From Rooftops

For the last several years, this nation’s largest publicly traded home builders have piled one record-setting quarter on top of another while watching their share prices tumble in the opposite direction of their earnings. They are fed up with it, and you can measure the degree of their frustration in dollars spent on a new advertising campaign they are now running in The Wall Street Journal and Barron’s.

Eleven of the largest public builders have formed a nonprofit alliance, the Public Home Building Council of America, to try to improve Wall Street’s understanding and perception of recent performances in this sector. The PHBCA’s first endeavors include the ad campaign in Wall Street’s premier publications and a Web site, www.publichomebuilders.com, to give details of the companies’ high financial achievements in excruciatingly positive detail.

Members of the PHBCA are Beazer Homes USA (BZH), Centex Corp. (CTX), Del Webb Corp. (WBB), D.R. Horton (DHI), Kaufman and Broad (KBH), K. Hovnanian (HOV), Lennar Corp. (LEN), Pulte Corp. (PHM), Ryland Homes (RYL), Standard Pacific Homes (SPF) and Toll Bros. (TOL).

"These 11 companies built 130,000 homes for revenues of more than $25 billion in 1999," says Toll Bros. vice president of finance Fred Cooper, speaking on behalf of the PHBCA. "They have produced, on average, annual earnings growth in excess of 20% over the past three years. And yet their shares are grossly undervalued by the Wall Street investment community.

"We hope that by joining together (in the PHBCA) we can turn that perception around. This is something we have not been able to accomplish individually."

It looks a little like tilting at windmills, but time will tell.