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What I see in the last two 10Ks is a negative cash flow from operating activities.

I, too, read the IBD article, looked up the financials, and noticed the negative cash flow from operations. It turned me off, too. I planned to check some other home builders to see if it is a common thread or if it is something particular to HOV, but I have not done that yet.

If the cash from operations is negative, it probably means that you're not managing your receivables. You're giving out good terms for sale, but your bills are coming due before your cash is coming in. The result is that you suck cash from your business, or you take out an operating loan, or both.

As for HOV, Iliked the IBD article and their general business strategy. They had a load of back-log and properties, which seems good in their business. But for the moment the negative cash flow bothers me.


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