CEO scandal? No worries, says Cramer: buy KB Homes

Jon Ogg — Mon, 13 Nov 2006 19:40:00 EST

Filed under: Analyst Reports, Management, Scandals, KB HOME (KBH), Lennar Corp'A' (LEN)

Options backdating scandals have felled many a tech CEO, and KB Home (NYSE:KBH) had the unlikely distinction of being an unlikely choice for an options backdating scandal. The company's CEO, Bruce Karatz, resigned today over stock options misdeeds. Jim Cramer (among others) didn't mourn him much, however, and said it's actually a good thing. Cramer says you have to go buy shares of KBH, because as the options scandal pressures a stock down, then it inches up, and then on the resolution of the scandal you must buy. With the CEO resigning, that is now out of the way.

Cramer said that even if you back-date options you have to think you are looking out favorably on the company down the road anyway. If a CEO was willing to take stock over cash then you should be inclined to take his lead. He thinks at 1.25 times book value that is a very cheap price. It has almost no debt. It could be a takeover target because it is so cheap. Cramer thinks private equity buyers could do it, or even a Lennar Corporation (NYSE:LEN).

KBH is widely and wrongly perceived as a California and Las Vegas homebuilder, but that isn't the whole truth, says Cramer. California is now 31% of sales and the company builds homes in 13 states. When California comes back, so will KBH. It also builds award-winning neighborhoods. He said he didn't like it when the shares were super-high, but now closer to lows he likes it.

CEO scandal? No worries, says Cramer: buy KB Homes originally appeared on BloggingStocks on Mon, 13 Nov 2006 19:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Is Apple's options scandal over?

Douglas McIntyre — Mon, 16 Oct 2006 08:55:00 EST

Filed under: Apple Inc (AAPL), Scandals

Lynn Turner, a managing director of institutional investing service Glass Lewis put it this way: "I would say that Jobs and the Apple board threw Fred (former Apple CFO and board member Fred Anderson) under the bus to keep it from hitting them." Charles Elson from The Center for Corporate Governance made the observation that, "In the end, it will really be up to the SEC to decide."

The options issue at Apple Computer Inc. (NASDAQ: AAPL) is not over, no matter how much the company wants the market to think it is. High profile cases make careers, and at the SEC and the U.S. Attorney's Office, an opportunity like this comes along only every few years.

With earnings just around the corner, the real risk to Apple's share price is probably not the number of iPods the company sold last quarter, although that could push the stock one way or the other near-term. With CEOs at high profile companies like CNET and McAfee moving out the door, the issue of what Steve Jobs' role in options grants was remains open.

With Apple's stock up from $50.67 on July 14 to $75.02, a piece of negative news that brings Jobs closer to the options back-dating issue would surely cause the stock to fall. With the government looking into how complete and accurate the Apple board's probe was, investors probably do not have long to wait.

Douglas McIntyre is a partner at 24/7 Wall St.

Is Apple's options scandal over? originally appeared on BloggingStocks on Mon, 16 Oct 2006 08:55:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments