Does this sound fishy?

[Stockowner]

I've had trouble reviewing some statements from NVR by their website, and the sec website is giving me a bit of a hard time. I've complained previously about this company's way of not being so open with information..

Anyways, something I disovered just recently, back at the annual reports there are a list of subsidiaries I am not familiar with which include "NVR Funding II" "NVR Funding III" and "RVN".

There is no mention of NVR Funding subsidiaries in the annual report(s), and about RVN I could for now only find:

Under a royalty agreement entered into on October 1, 1996 with NVR, Inc.
("NVR"), RVN's parent company, RVN, Inc. ("RVN") earns royalty fees based on a
percentage of settlement revenue for allowing NVR to use the Ryan Homes and
NVHomes tradenames to market homes. RVN earns 100% of its revenue from NVR. The
increase in royalty revenues in the current three and nine month periods as
compared to the prior year three and nine months periods resulted from higher
revenues earned by NVR. RVN has no significant other income or general and
administrative expenses.

IQUIDITY AND CAPITAL RESOURCES

RVN provides for its working capital cash requirements using cash generated
solely from operations. As shown in RVN's statement of cash flows for the
period ended September 30, 1998, cash generated from operations is primarily
distributed to NVR. Insofar as NVR's ability to make royalty payments is not
impaired, RVN believes that internally generated cash will be sufficient to
satisfy its near and long term cash requirements.

SEC Info - RVN Inc - 10-Q - For*9/30/98


So, let me get this straight.. RVN is a subsidiary of NVR, and RVN has a subsidiary? And RVN, from looking at the balance sheet, is very very small by looking at the balance sheet provided, and what they do is to drain money from NVR and then give it back to NVR?

"Cash generated from operations". What operations?

It could be I am a really bad detective, but I had to look at pre-2000 information to find some information.. And still it can be difficult to fully understand their business. Their statements are very repitetive year to year, and shouldn't such information be more readily available to shareholders?

In regards to lack of openness, apparently the company also refuses to take interviews from media..

[Gunnski]

Keep it simple! It you do not understand it or cannot make sense of it, turn the page. Why waste time on this type of mouth wash? Is this something your proud to buy?

[joshuat]

Originally Posted by Stockowner

Anyways, something I disovered just recently, back at the annual reports there are a list of subsidiaries I am not familiar with which include "NVR Funding II" "NVR Funding III" and "RVN".

There is no mention of NVR Funding subsidiaries in the annual report(s), and about RVN I could for now only find:

The very first paragraph of the current 10K states: " Our mortgage banking operations are operated primarily through a wholly owned subsidiary, NVR Mortgage Finance, Inc. (“NVRM”). Unless the context otherwise requires, references to “NVR”, “we”, “us” or “our” include NVR and its consolidated subsidiaries." Scrolling down gives a lot of information on NVRM.

I haven't googled much, but the RVN stuff appears to be an old arrangement. What makes you think the RVN, Funding II (which google shows used to be part of NVR Mortgage Finance), etc., are currrent operations which are being hidden?

[Stockowner]

It's not neccesarily that they keep things hidden, but I think they somewhat fail to communicate effectively with shareholders. Haven't got much sleep due to exams, maybe that is why I am rambling.

[Stockowner]

Why waste time on this type of mouth wash? Is this something your proud to buy?

NVR is in my view interesting because the company is;

* Still making money in the home building sector
* Has a good land procurement strategy
* Very high inventory turnover compared to the rest of the industry
* Very good return on equity, assets and invested capital
* The book value per share is about 200 and the stock is selling for 530.
* 10 year average annual growth at 47 percent.

:)

[Gunnski]

Have you figured out your risk - reward on this over priced jelly bean?

[Stockowner]

Why do you say "over priced"? If you take a quick look at morningstar, you will see NVR has a P/E of 9,70 and price to cash flow at 5,80. It's not cheap for an average stock in the home building sector, but then again this company is not struggling like most home builders.

If we say earnings when the housing market returns to normal will be at a 50-60 dollars per NVR share (in 2007 it was at 57 dollars per share), and we estimate that its growth will be at a slightly conservative estimate of, say, 18-23 percent a year, I think it is pretty obvious that the intrinsic value we will arive on, will be much higher than 530 dollars per share?

I think the future for this company (especially if it keeps its current business model) is very favorable.

[Gunnski]

Lets see. It will be lots of fun to follow this one. I may be able to buy one share with my stimulus check at around $450.00 per share (my entry point). That price will conincide with the arrival of the Holy Grail check (Sept. 2008) according to my SSN.

Keep up the good work. You may want to look at some of Warren Buffet's stocks.

Best of investing!