D.R. Horton, Inc.
Thesis
I advocate a short position in the common stock of D.R. Horton, Inc. as I believe the stock has an intrinsic value today of $7.25, representing a margin of safety of approximately 40% against today’s price of $11.86. The company is poorly positioned in the current homebuilding environment with significant exposure to weak geographic markets and deteriorating sales orders, which will likely lead to further impairment announcements.
Did it work?
The short thesis on D.R. Horton, Inc. was highly successful, as the stock price decreased significantly from $11.86 to a much lower value, resulting in a return of -1177.0%. The thesis correctly identified the company's poor positioning in the homebuilding environment and the risk of further impairment announcements, which played out over the long term. Given the substantial time elapsed and the dramatic price decline, the thesis can be confidently deemed to have worked.
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