Why Lennar Rallied This Morning

Does this analyst make a good case? Or is it just more noise from Wall Street?

Feb 6, 2014 at 11:31AM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Lennar (NYSE:LEN) popped 3% this morning after Goldman Sachs upgraded the homebuilder from neutral to conviction buy.

So what: Along with the two-notch upgrade, analyst Eli Hackel boosted his price target to $48 (from $38), representing about 21% worth of upside to yesterday's close. While value investors might be turned off by the stock's strength in recent months, Hackel thinks there's plenty of room to run given his view that Lennar's subsidiaries are underappreciated by Mr. Market.

Now what: According to Goldman, Lennar's risk and reward trade-off is particularly attractive at this point. "We believe the market is valuing LEN almost exclusively for its core homebuilder business, while ascribing little value to its ancillary businesses," Hackel wrote. "We did a deep dive on FivePoint communities, Rialto and Multifamily, including modeling out the profitability and value creation of each business, driving our estimates higher and putting us 2%/9% above Street EPS in 2014/2015." Of course, with Lennar shares up nearly 20% over the past three months and trading at a P/E premium to the industry, I'd wait for a wider margin of safety before buying into Goldman's conviction call. 

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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