Barron's Article on Hovnanian: "Hammered and Nailed" ($HOV)

This was a great Barron's article on Hovnanian that I meant to post earlier.

Vicki Bryan, an analyst at research outfit Gimme Credit, points out that the company hasn't generated enough cash to cover interest costs since 2006, the result of weak demand and stepped-up land acquisitions considered vital for its future.

[...]That's why Bryan thinks a bruising recapitalization is inevitable, perhaps within a few months. The maneuver could involve converting outstanding bonds into equity, heavily diluting existing shareholders. Bryan goes so far as to call Hovnanian's stock "worthless."

The article's "bottom line" has been prescient: "Hovnanian may have to ask bondholders to swap debt for equity, diluting stockholders."

I've already written a few posts about Hovnanian. I view the debt as cheap relative to the stock, and you'll notice that they are undergoing a slow motion restructuring.