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NEW YORK (
) -- Back in June 2010, Ara Hovnanian, chairman of
, waxed enthusiastically about housing and the prospects for his company on
's "Fast Money."
in which Hovnanian dismissed talks of a housing double dip and suggested his company was on firm financial footing.
At the time of his interview, the shares of his company were trading between $6 and $7 a share. They now trade at $1.65 a share.
I wrote back then:
"Housing will recover but I am less certain that his company will. Hovnanian has $450 million of cash but $1.75 billion of debt -- so the company's net debt is about $1.3 billion. And here are the income statements for the last three years. Ergo, I would challenge his assertions that Hovnanian is positioned to thrive in this environment."
Hovnanian followed up with additional positive comments on
about housing and his company on several additional occasions since last summer:
- On "Squawk Box" on Sept. 10, 2010, he talked about improving momentum in July and August because of better housing affordability.
- Again on "Squawk Box" on Oct. 13, 2010, Hovnanian said that momentum is even better.
- On Jan. 18. 2011, Hovnanian expressed more optimism about his company and the residential real estate market in response to some tough questions by CNBC's Melissa Lee on "Fast Money" (again!)
- The ubiquitous Hovnanian again appeared on "Squawk Box" on Feb. 8, 2011, telling "Q" (Carl Quintanilla) that traffic and sales "really picked up ... as momentum builds" to the upside.
Last night Hovnanian
reported large losses
for the three-month period ended July 31 and for the year to date. It was not a pretty picture, with three-month losses of more than $50 million and a year-to-date loss of $1.92 a share, or $194 million.
Here were Hovnanian's comments in last night's press release:
"The housing market remains challenging primarily due to uncertainty caused by general domestic economic and political concerns, stock market volatility and turbulent international economic conditions, all of which are taking their toll on consumer confidence... Despite this difficult backdrop, our deliveries, revenues, gross margin and cash flow for the third quarter were in line with our expectations. However, we see very few indicators that any recovery in the housing market has begun. As such, we are taking appropriate steps to run our business based on current market conditions, with a focus on maintaining adequate liquidity."
As I mentioned previously, HOV's stock is currently trading at $1.65 a share and the company appears on the financial brink, even despite a series of capital raises (naturally at much, much higher prices).
So what are the lessons of this column and of Hovnanian's very-wrong-footed commentaries over the past several years?
I have interviewed literally hundreds of corporate executives personally and in the media, and I have almost never met a manager who was bearish on his company's prospects. But Ara Hovnanian's consistent and misguided optimism may take the cake in the pantheon of executives.
Make your own investment decisions and put the often predictable cheerleading by company managements that you might see during conference presentations, conference calls and in the media in perspective.
CNBC should never invite Hovnanian back on air. Never.
And, never, ever should an investor listen to Ara Hovnanian.
Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.