KB HOME (KBH)
We’ve owned KBH a few times over the years. Our current investment in KBH is up 14.92% since our purchase in the spring, but forward forecasting at least for the next 12-18 months does not look promising. In addition, problems with KBH’s mortgage lender, and some bad choices as to streamlining costs are not putting the company in a competitive frame relative to other volume builders. Its debt remains too high, and is not trending well. The divided was also recently cut. So we’ll take the gain and the small dividend (1%) and call it a day. If KBH can put itself back on track, and the price is right, we’d revisit them as a buy, as much of their model still works. SELL.
The Genius Guide to Value Investing 
#1 by Sally Urbaniak on November 10, 2012 - 8:54 pm
KB Home has made a tragic mess in Willowbrook community in Bradenton, FL and 12 other Florida communities (and counting). KB Home did NOT disclose to unsuspecting buyers serious structural and dangerous defects which they knew about in 2007. Due to their shoddy building and lack of disclosure-buyers are now living in crumbling, moldy, wet structures-most less then a couple years old. Visit: http://thekbhome.com
#2 by Brian Ross on November 10, 2012 - 9:14 pm
Not exactly the forum for the complaint, but it is unfortunate to hear. No one at the state attorney’s office has an interest in something so endemic?