05/11/06 I know I sound like Johnny One Note, but it’s ironic how much the macro element lurks in the shadows. The Rodriguez buys in ‘74 and ’99, for example: ’74 was one of the best big-picture long opportunities ever, as the entire market had been killed. It was a similar case for drillers in ’99, as crude oil bottomed out Dec ‘98-Mar ‘99.
Right now, the climate is favoring safe havens, in my opinion. Or rather, right now its favoring garbage, but it will favor safe havens when the garbage gets hammered, as it inevitably will.
In terms of industry questions, I would be curious to know more about the homebuilder cycle and the debt collection biz in relation to manufactured homes. Builders tend to overshoot at the end of the boom – how much supply overhang could that create? Do manufactured homes compete with stick-built homes, or are their price points and locations varied enough to qualify as a different market segment? What happens to the flood of homeowners who lose their homes to foreclosure when interest rates rise? Would a manufactured home be an option?
From my uneducated perspective, it looks like a turnaround play with a number of hard-to-calculate X factors. The RV idea is more straightforward, but again more secular growth oriented than safe haven.
Dave Gonigam
Treading a fine line between contrarian thinking and conspiracy theory, Dave Gonigam explores the nexus of finance, politics, and the media for Agora Financial's 5 Minute Forecast. He joined kindred spirits at Agora Financial in 2007 after a 20-year career as an Emmy award-winning writer, producer, and manager in local TV newsrooms nationwide.
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