By John Spence
BOSTON (Dow Jones) -- Home-builder stocks traded lower Monday
after announcements on an economic stimulus package and a plan to
help troubled banks were pushed back. Wall Street analyst
downgrades also contributed to the selling, though Beazer Homes USA
Inc. rallied after the company reported a narrower quarterly
loss.
Lennar Corp. shares were down about 4% after Citigroup analysts
cut their rating on the stock to hold from buy. In a research note,
they said the recent outperformance of the stock relative to the
builder group has put Lennar's risk and reward profile in
balance.
Citi added the "Minkow Effect" on Lennar's stock price appears
to be diminishing. Barry Minkow, the co-founder of Fraud Discovery
Institute, has made fraud allegations against Lennar and accused
the home builder of treating its joint ventures like a Ponzi
scheme. Lennar has denied the accusations and is battling Minkow in
court.
Although Lennar shares dropped about 20% on Jan. 9 when Minkow
made his initial allegations, "we note that Minkow's subsequent
press releases have largely not impacted the stock," the Citi
analysts wrote. "While we think the 'Minkow Effect' is fading, and
while we think that his allegations against Lennar are unfounded,
we note that headline risk for Lennar remains elevated."
Citi upgraded Lennar to buy in late January, saying the fraud
accusations were likely groundless.
Elsewhere in the builder sector, shares of Pulte Homes Inc. were
off 6% after Credit Suisse downgraded the stock to underperform
from neutral. The iShares Dow Jones U.S. Home Construction Index
Fund , an exchange-traded fund tracking housing stocks, was down
nearly 2%. Investors had been hoping for news on Monday on the
government's plans to jumpstart the economy and the banking
system.
However, shares of Beazer Homes USA Inc. rallied as much as 30%
on Monday after the Atlanta-based builder reported a smaller
quarterly loss.