Turn around

First, I never liked the homebuilders. What's happening out there, the massive sales of existing and foreclosed homes, will keep a lid on prices, and you need rising prices and dramatically lower inventory to make a compelling case for KB Home (KBH) or Pulte (PHM) or D.R. Horton (DHI) or especially Hovnanian (HOV).

Aug. 11 blog post: "First, I never liked the homebuilders. What's happening out there, the massive sales of existing and foreclosed homes, will keep a lid on prices, and you need rising prices and dramatically lower inventory to make a compelling case for KB Home (KBH) or Pulte (PHM) or D.R. Horton (DHI) or especially Hovnanian (HOV)."

"There is a gigantic tug of war playing out here between the homes being pumped out by Lennar (LEN) or Pulte (PHM) or Horton (DHI) and the homes owned by Bank of America (BAC) or Wells Fargo (WFC) or JPMorgan (JPM) -- repossessed homes that could really kill any recovery. The homebuilders cannot make the houses cheaply enough to compete against the foreclosed homes. That's terrific." "We Want Sales of New Homes to Dry Up," 6-24-09

McHugh also is making some bets on early beneficiaries of a cyclical recovery. "We're primarily bottom up, but we do take a macro viewpoint in each of our individual sectors," he explains. Some of McHugh's recent buys include home builders D.R. Horton (DHI) and Pulte Homes (PHM). The fund got rid of home builders in August 2006, McHugh says, but started accumulating shares again in the fourth quarter of 2008 and the first quarter of this year. "We're positioning the portfolio with some of those stocks that we feel can benefit from a recovery in the economic cycle," he says. "That's where we would put [Horton] and Pulte."

As for Pulte Homes(PHM) and DR Horton(DHI), "I think you buy 'em," he said.

From a recent Mad Money show:"The stock is up on a spike this week. I think it can retreat a buck and a half, let's wait to buy more."

Let's take some Toll Brothers (TOL) and KB Homes (KBH), and why not some Lennar (LEN) and D.R. Horton (DHI)?

The Real Story Wrap: November 24: U.S. stocks soared into the close Monday after the government announced an aid package for Citigroup and President-elect Barack Obama unveiled key members of his economic team.
Click here to watch the video.

Centex (CTX), Lennar (LEN), KB Home (KBH), Horton (DHI) and Pulte (PHM) look so cheap they are scrumptious ... until you look at their credit lines, which make them seem downright expensive.

not honest

Home builder won't make money for years.

One - two combo of poor home market complinebted by equally poor management.

Weakening economy, subprime mess

no hope for a quick turnaround in home builders

Housing is a disaster.

same as above

bottom line is housing is down

Cramer noted that DR Horton (DHI-NYSE) is the most leveraged since it bought large property rights and has the least-written down property values of the sector.

outlook is getting dimmer