Toll Insider Actions Don't Match Words

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Editor's Note: This column by Doug Kass is a special bonus for RealMoney readers. It appeared on Street Insight on March 9. To sign up for Street Insight, please click here.

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Let me start by saying that no one could have been more wrong about the homebuilding stocks than I.

Experience has taught me that there are many ways to be wrong about the markets, through shortsightedness and farsightedness, but also through pride, bad luck, impatience, imagination and ignorance. In the case of the homewreckers, it has been a bit of all these!

That said, Toll Brothers' (TOL - commentary - Cramer's Take) stock took a hit in the March 8 market, dropping by $3 a share.

That evening, "in anticipation of a series of investor presentations," CEO Robert Toll stated that "for each of the five weeks since the end of our record-breaking first quarter, non-binding deposits, a precursor to contracts, have been the highest or second-highest per community in those five weeks in the last 10 years."

I suspect the real reason that the release was made was that the stock got hit the day before, as many of the homebuilders have gotten increasingly promotional, coincident with the excellent fundamentals of the last few years and in light of the remarkable stock price performances.

In the past, I have found the management of Toll to be quite gracious (in a one-on-one meeting I had with the company and in other forums). When I have critiqued the company and my facts were wrong, I routinely would get an email from the company to correct my version -- and I quickly did. One time, for example, I mentioned that one of the Tolls, an executive with the company, sold a large position in the company. Toll Brothers sent me an email clarifying that the Toll in question was a non-executive director, and I dutifully corrected my statement.

What really got into my craw (and I want to get this off my chest) was a recent appearance by Robert Toll on CNBC during the week of Feb. 21.

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At time of original publication, Kass and/or his funds were short Toll Brothers, although holdings can change at any time.

Doug Kass is general partner for two investment partnerships, Seabreeze Partners L.P. and Seabreeze Partners Short L.P. Until 1996, he was senior portfolio manager at Omega Advisors, a $4 billion investment partnership. Before that he was executive senior vice president and director of institutional equities of First Albany Corporation and JW Charles/CSG. He also was a General Partner of Glickenhaus & Co., and held various positions with Putnam Management and Kidder, Peabody. Kass received his bachelor's from Alfred University, and received a master's of business administration in finance from the University of Pennsylvania's Wharton School in 1972. He co-authored "Citibank: The Ralph Nader Report" with Nader and the Center for the Study of Responsive Law and currently serves as a guest host on CNBC's "Squawk Box." Kass appreciates your feedback and invites you to send it to [e-mail].