Salient to Investors:
Goldman Sachs said homebuilders have already priced in the housing recovery, so investors need to look beyond these stocks for the ripple effects of housing stabilization – like certain versions of the ABX and US domestic banks.
Kyle Bass at Hayman Capital Mgmt said senior-ranked subprime debt offer a very safe place to make double-digit returns, and are virtually bulletproof because even if the housing market declines by 10 percent, investors won’t take a principal hit on their bonds.
Clayton DeGiacinto at Axonic Capital sees significant risks in the market, including loan servicers forgiving principal for delinquent homeowners.
John Sim at JPMorgan Chase sees better value in subprime cash bonds.
Buck Horne at Raymond James said the housing recovery may be hitting headwinds, including new financial regulation likely to emerge in 2013.
John Dolan cautioned that new-home construction and property values may not move at the same pace or in the same direction, and mortgage-bond prices can be linked to unrelated issues such as benchmark rates and how individual loan servicers deal with bad debt. Dolan said ABX contracts are a good viable way of expressing a view on home prices.