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Real Estate Investing: The UK’s subprime collateral damage

Posted February 21, 2008

"It’s refreshing when you get to see an analyst really laying into something. And that’s exactly what Dresdner Kleinwort’s Alastair Stewart did to the housebuilders yesterday." — John Stepek

by John Stepek

Baltimore – (TFN):  Strongly expressed opinions are a rarity in analysts’ notes.

Comment is usually hedged and concealed behind figures and charts and ratios. This gives some illusion of objectivity, when in fact buy or sell recommendations largely come down to each individual analyst’s opinion.

It’s a safe way to operate – but it doesn’t half make for dull reading.

That’s why it’s refreshing when you get to see an analyst really laying into something. And that’s exactly what Dresdner Kleinwort’s Alastair Stewart did to the housebuilders yesterday…

Housebuilding stocks tumbled yesterday after a brutal research note from Dresdner Kleinwort analyst Alastair Stewart, who warned that “reckless lending and over-building of flats threatens recession.”

Most homebuilders will start reporting their results next week. But Stewart warned investors to “head for the exit” before then. Taking a wrecking ball to earnings forecasts, he said: “We believe it is pay-back time for years of speculation, to which most housebuilders are now indirectly exposed.”

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Worst case, he expects to see “a multi-year slump, losses in two to three years, land write-downs, strain on cash and dividends.”

Real Estate Investing: Alliance & Leicester take a tumble

Regular Money Morning readers are unlikely to be invested in housebuilders, but suffice to say we agree with him entirely.

Of course, it’s not just the housebuilders who are going to be affected by the collapse in the housing market. Alliance & Leicester’s results yesterday just confirmed Stewart’s comments about “reckless lending.” Read on to learn A&L's annual results and what they mean for the rest of the UK's mortgage industry.

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Posted by John Stepek · Filed Under International Investing 

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