One could say that Bob Toll led the builder stocks out of the wilderness, at least for a day.
The builder stocks rallied strongly on Wednesday, continuing gains posted on Tuesday after it became apparent that the Fed was acknowledging some risk to economic growth from the housing downturn. But it was Toll's preliminary earnings report, which was released early Wednesday morning, that propelled the builder group, perhaps fueled by hedge funds that were forced to cover shorts on the builder stocks.
Toll reported a 21% drop in revenue, but it was better than Wall Street expected, and that was all the group needed.
Avatar, which has held up better than most builder stocks during the downturn, was the only builder stock not to post a gain, but it didn't lose either, settling in at $60.81, where it closed yesterday.
Adding evidence to the notion that short-covering had much to do with the rise was that Beazer, which counts two hedge funds among its big shareholders, was up 24.77% to $15.01. Other builders with weaker balance sheets were up wildly as well, with WCI up 24.53% to $9.90; Orleans up 20.15% to $6.50; and Comstock up 13.75% to $1.82. Dominion, however, was up only 8.77% to $3.72.
Hovnanian was up 20% to $14.70. M/I was also up strongly, by18% to $28.50.Centex rose 8.16% to $38.58; D.R. Horton up 6.9% to $18.59; KB up 8.80% to $35.97; Lennar up 4.47% to $36.03; Meritage up 10.7% to $19.97; Pulte up 7.21% to $21.85; Ryland up 5.82% to $37.47; Standard Pacific up 9.76% to $11.92; TOUSA up 9.91% to $2.55; and Weyerhaeuser up 2.37% TO $69.98.
MDC was up 1.65% to $49.20 and NVR up 2.65% to $620.
For its part, Toll Brothers was up 6% to $24.33.
The S&P Home Builders Index, on the Amex Exchange, was up 7.25% to$28.24 in after-hours trading as of 4:38 p.m.