It Just Needs Some Beauty Sleep

 | Nov 13, 2012 | 10:53 AM EST
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Sometimes stocks, like people, get tired. I think D.R. Horton (DHI) got tired Monday. It started out with a roar, up almost $1, and went out with a nap -- down $1.20, and looking like it was down for the count.

You would think there was something wrong with the quarter, which was the company's best in five years. I think that, actually, pound for pound, this report was much better than results from five years ago -- because this time Horton is selling to real people, or at least it says it is. It's not selling to speculators who turned out to be the company's worst enemy.

I am sure that, once the stock started falling, there were people who found things they didn't like. But, believe me, they didn't find anything they didn't like when the conference call was on.

This was simply a case of a stock being up more than 50% -- one from which many people have profited -- and the company didn't blow away numbers to the point at which you had to take up shares. Instead, Horton just did a good, solid job which is no longer enough in this market -- not with visions of fiscal cliff dancing in our heads.

There was a lot to like about the quarter. Horton has made an acquisition that gives it more land. It has reclaimed land that had been written off. It achieved nice margins on new homes. Further, it's seeing lots of demand and frequency of transactions, even despite how hard it is to get a loan.

I just think that, in the end, investors were looking for a reason to sell -- and, right now, a good reason to sell is simply that everyone else is selling. You figure, if you have a big capital gain, what's the harm? That's especially so when even the sacrosanct mortgage deduction is on the table.

Yes, the "what's the harm" selling is now out in full force until we find out what the new tax rates are. If they are roughly the same, then it might pay to stay in a Horton simply because you'll get to defer the event until a time that is more suited for you, as long as the business is OK.

Nobody likes to pay taxes anyway.

Otherwise, though, you can simply say, "I didn't like what I saw in the southern markets," or "they sounded worried." In fact, it was "all systems go" for the company, but the stock? It needs some beauty sleep.

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