Cutting to the chase, the fundamentals of manufactured housing are sound. The fundamentals of most manufactured home producers are sound too, including Skyline Champion (SKY). The need for affordable housing has rarely, if ever, been greater in the U.S.A. Nevertheless, Skyline Champion took a sharp slide on Thursday and Friday.
Earlier this year, Seeking Alpha cautioned their readers against Skyline Champion. The following are pull quotes from that report.
Skyline Champion: A Risky Way To Play Housing
Jan. 04, 2022 11:12 AM ET Skyline Champion Corporation (SKY)
Summary
- Skyline Champion has done well to grow its business in recent years, with particularly strong growth occurring this year.
- If growth in the market continues, the company could be a solid prospect, but it is more expensive than many of its peers.
- Add in the downside risk if the market should slow down and it’s just not a prime prospect to consider at this time. … ##
That snapshot runs counter to what the headlines below the market summary graphic from Yahoo Finance that follows indicates. But note that even Yahoo’s prognosis states that Skyline Champion’s there is short, medium, and longer term downward pressures on SKY’s stock price. That graphic is an example of how one side of their data (see below), which claims that SKY’s stock is still undervalued, is apparently in contradiction with the other side of their own charts, which says that the short, medium and longterm outlook is bearish. At least superficially, it doesn’t seem logical that both could be true. Zack’s says SKY is a “strong buy.”
MHProNews is not offering a specific statement on Skyline Champion and its stock price or valuation.
But editorially, it should be said that Skyline Champion, Cavco Industries (CVCO) and others should be performing better than they are.
Some insider voices hint that not everyone in Skyline Champion and/or Cavco are not keen on the Clayton Homes backed and Manufactured Housing Institute’s de facto, but unstated, game plan. Be that as it may, there is no clear and public indication that either firm is bucking Clayton/Berkshire’s leadership. Quite the opposite has been occurring for some years.
A legal on a significant manufactured housing industry update on an MHI member brand is planned for this upcoming week. It is based on insights and documentation from a law firm that should know.
Several of the headlines in the week that was indicate that mainstream housing is dipping. But is that a reason for HUD Code manufactured homes to slide too? Logically, that should hardly be the case.
Nevertheless, the increasingly apparent lack of serious effort by MHI toward boost robust industry growth is evident in headline after headline.
Don’t miss today’s postscript.
With no further adieu, here are the headlines for the week that was from 3.20 to 3.27.2022.
What’s New on MHLivingNews
What’s New on the Masthead
What’s the Latest from Washington, D.C. from MHARR
What’s New on the Words of Wisdom with Tim Connor, CSP
What’s New on the Daily Business News on MHProNews
Saturday 3.26.2022
Friday 3.25.2022
Thursday 3.24.2022
Wednesday 3.23.2022
Tuesday 3.22.2022
Monday 3.21.2022
Sunday 3.20.2022
Postscript
There are two infographics provided below from third-parties. The first is by the Manufactured Housing Institute (MHI). It asserts that in 2020, per IBTS data, that there were 129 active building or production centers operating in manufactured housing. The second graphic by MHVillage/MHInsider, and it is fascinating on several levels. In no particular order of importance is the point that even as manufactured housing demand has increased, there are only about 6 new production centers opened nationally, per MHI data, in the past two years. Ponder that for a moment. During an affordable housing shortage, a relatively modest number of new production centers have been brought online.
Another point from the MHV data is that Clayton Homes (BRK), Skyline Champion (SKY), and Cavco Industries (CVCO) have about 80 percent market share. Yet, SKY and CVCO continue to talk about consolidation. What are their corporate leaders thinking? Isn’t it obvious that it will require opening up new production centers to increase production? Are they so brazenly trying to consolidate the industry as to attempt to press all independents out of the market before they grow production and distribution?
While what is provided is interesting, MHVillage fails to provide a foundational framework or point of reference for their data. Meaning, where is there any reference to the industry’s trends and historic data? Where is there a graphic like the one below, which MHProNews has been periodically updating in recent years? While there ought to be some level of ‘celebration’ that manufactured housing has finally crossed the 100,000 homes per year level in 2021, that’s isn’t mentioned by MHV in the graphic above. Much less is there a greater context that in 1998, manufactured housing collectively produced a reported 373,142 new HUD Code manufactured homes. Meaning, our profession is still operating at less than 30 percent of the level that was achieved in 23 years ago.
So, by contrast to MHI and MHI member MHV, MHProNews and our MHLivingNews sister site routinely reminds readers that manufactured housing is still underperforming historically in terms of production and sales.
MHI has openly – and stunningly – admitted in their own words what MHARR has been accusing them of, namely, that MHI is giving the DOE a lifeline on their flagging energy rule. Why is that shocking story being ignored by other industry publications and bloggers?
What MHI has not yet admitted is that they have failed to flex their legal muscles on getting enhanced preemption enforced. Or in getting the GSEs or Ginnie Mae to turn on the spigot of more competitive financing that could send manufactured housing sales soaring.
Skyline and Cavco have board positions. Supposedly, per MHI outside attorney David Goch, MHI welcomes debate and vigorous discussion. That hardly seems plausible, given the years of evidence published here and on MHLivingNews, which we have repeatedly invited MHI to debate. Indeed, the two pull quotes from Gooch – both taken from the same document – almost suggest the contradictory nature of their respective claims.
Ironically, the headline report from last Sunday is a reminder that there are professionals who clearly recognize the need for a new post-production trade group. That announcement by MHR was a slap in the face of MHI, though that is not how it was framed.
The bottom line for today? Be it Skyline Champion, Cavco Industries, or any other non-Clayton Homes producer of HUD Code manufactured housing, there is a case to be made that the industry’s producers ought to be able grow in a profitable and sustainable fashion. The laws needed to support that growth already exist. So, why are Skyline Champion and Cavco’s leaders not promoting a vigorous enforcement, using attorneys and lawsuits as necessary, to press the federal government to implement laws that have been on the book for over one and two decades respectively?
If Skyline Champion’s slump continues, their investors arguably do not have to look beyond that firm’s corporate management for accountability. As the headlines and reports for the week that was documented, millions of new housing units are needed. Only factory builders can close that gap. Manufactured housing has the laws needed to make the overcome the financing, zoning, and placement issues of the 1990s and previously. On the threats from the DOE energy rule, MHI has the legal muscle to do what’s needed there too. So, what is MHI waiting for, then? The answers routinely seems to be – more consolidation. As an MHI insider told MHProNews last week, since Chris Stinebert left MHI, a cabal of corporate leaders have taken control of that trade group. That group, per that insider, are ‘f-cking greedy, selfish leaders of companies that have sought to make MHI a tool for themselves.’ That happens to fit the less colorful, but similar description from former MHI award winner Marty Lavin.
The ‘announced’ new so-called trade group covered in last Sunday’s report may be nothing more than a diversion or head-fake. But it is a reminder of what is needed. Namely, for ethical and growth-minded post-production professionals to form a group that can work with independent and growth-minded producers at the Manufactured Housing Association for Regulatory Reform (MHARR) to unleash the industry’s good laws. Doing so would open the door to potentially millions who are seeking their part of the American Dream of home ownership. ##
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By L.A. “Tony” Kovach – for MHProNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.
For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
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