The stock of Beazer Homes USA's has been on a wild ride this week, swinging from a high of $14 to a low of $8.10 on Wednesday back to $13.24 by noon Thursday. This volatility has apparently made the stock attractive to hedge funds, which often play a straddle, both the long and short sides of a stock. A combination of hedge funds and institutions now own more than 60% of the company.
The dip was caused by rumors of an imminent bankrupcty filing Wednesday morning, which were strongly denied by the company, and the rise on Thursday came after it was disclosed that Citadel Wellington had become the latest hedge fund to buy more than 5 percent of Beazer Homes USA's stock, purchasing 2,229,600 shares on July 24, giving it a 5.7 percent ownership. Citadel follows Moore Capital Management, which beefed up its holdings by 1,647,500 shares on June 26 to push it over the 5% point.
Other large shareholders listed on Beazer's website, from Thomson Financial, include Fidelity Management & Research: 5,873,231 shares, 15%; Legg Mason Capital Management: 5,740,762 shares, 14.7%; Capital International: 3,589,400 shares, 9.2%; Ziff Asset Managemen: 3,474,600 shares, 8.9%; Tontine Management: 3,465,794 shares 8.9%; Franklin Mutual Advisers: 2,944,164 shares, 7.5 %; Moore Capital Management: 1,987,500 shares, 5.1%; Hotchkis and Wiley Capital Management: 1,560,833 shares, 4.0%; Dimensional Fund Advisors:1,387,487 shares, 3.6%; and State Street Global Advisors: 208,551 shares, 3.1%.
The stock of Beazer Homes USA swung wildly Wednesday morning as rumors about the company's liquidity and a possible bankruptcy filing swept through the investment community.
The company issued a statement denying the rumors: "We have become aware of rumors circulating in the market about Beazer Homes' liquidity and a prospective bankruptcy filing. We do not know where these scurrilous and unfounded rumors started. For an accurate representation of the company's financial position, including the company's liquidity and near-term prospects, we encourage investors to refer to the company's recently released third quarter earnings release and the script of our conference call with analysts and investors."
The stock, which opened slightly at $13.93 per share, was trading over $14 until shortly after 10 a.m., when it nosedived on heavy volume to a low of $8.10. It came off the low around 10:45 a.m., volume subsided, and it had climbed back to $11.41 by 1:15 p.m. It closed at $11.48. Beazer stock is off a 52-week high of $48.60, reached on December 6, 2006.
Beazer just last week reported a loss of $123 million for its fiscal third quarter, including impairments of $188.5 million. At the time, the company said it had $128 million in cash on hand. It also reported that it had arranged a new, $500 million revolving credit facility with less stringent terms than its previous $1 billion revolver.