Just a quick warning to all the BHS shorts out there.....and there are quite a few of them. 2.5 million shares at present.....it may be approx 10% of the total share count but it's 25% of the float!!! Anyway, just wanted to point out a couple of things which could get you guys in a bit of squeeze. First, the company will be completing its $250 million Rights Offering very shortly and BHS's majority owner, BAM, has already committed to fulfill the total amount if needed. Conversion price is $7/share. Next, there will be an upcoming $60 million tax refund along with $60 million in projected operating cash flow this year. So, the company will be ending 2009 with debt levels of around $380 million (or about 1/2 of what it was at the beginning of 2009). Also, its Shareholders Equity will jump up to $500 million+ after the Rights Offering.
I'm not predicting at all that the housing market is on the verge of recovery BUT this stock is trading at DISTRESSED levels when, in reality, it's on the verge of having a VERY SOLID balance sheet in the near future. And it has the wherewithal to continue generating significant positive operating cash flow for years given its significant inventory of fully finished lots (much of the land was acquired RAW in the early years of this decade).
FYI....I decided to write this note solely in the interest of cautioning you guys about the facts of this case. Much of the daily volume is generated by the shorts both buying and selling and when the facts become more publicly apparent there's going to be a giant rush to the exit.
Good luck!!!