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Housing Warnings Do Little to Dampen Rise in NVR Shares

By Jerry Knight
Monday, November 29, 2004; Page E01

The stock of NVR Inc., the region's biggest home builder, just keeps climbing, defying warnings from Federal Reserve Chairman Alan Greenspan and red flags waved day after day by NVR's top executives.

This quarter, NVR has been the top-performing stock in the home-building business, continuing a run that over the past few months has pushed NVR from about $450 a share to $694 on Friday.

NVR: Riding the Building Boom The region's largest home builder has seen big increases in earnings and its stock price. This year, corporate insiders have sold NVR shares worth more than $200 million.
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As anybody who listens to Greenspan knows, home-building stocks ought to have nowhere to go but down. At some point, higher interest rates are going to have the effect they always have and new home sales will go into a downturn, taking home-building stocks with them.

"Rising interest rates have been advertised for so long and in so many places that anyone who hasn't appropriately hedged his position by now obviously is desirous of losing money," the Fed chairman declared a few days ago.

The buying that keeps NVR stock climbing hardly reflects what a prudent investor would do to hedge against a downturn in home building. But the people who run the company appear to be heeding Greenspan's advice.

As NVR stock climbs higher, insiders keep selling more and more -- $220 million worth this year, according to data from Thomson Financial.

In the past week alone, NVR chief executive Dwight C. Schar and Chief Financial Officer Paul C. Saville cashed in roughly $40 million worth of the stock.

Schar sold 43,000 shares and took home nearly $31 million. Saville sold 13,000 shares for around $9 million. Other insiders have been selling, but in smaller quantities.

Last week's sales bring Schar's total take from selling NVR shares this year to about $155 million. After his latest sale, Schar reported owning 436,000 NVR shares and options, worth more than $300 million at current prices. On Friday the Securities and Exchange Commission made public a filing in which Schar said he plans to sell another 25,000 shares, which would bring in another $35 million and lift his total sales for the year to around $190 million. Last year he sold $179 million worth of the stock, enough to buy a minority stake in the Washington Redskins.

Schar's profits on the sales cannot be calculated from public records, which do not reveal how much he paid for his shares. But because Saville cashed in stock options, his disclosures show both what he paid for the shares and what he received, and they disclose big profits.

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