Dominion Homes: Plenty of New News Lately!

Dominion Homes (NASDAQ:DHOM) is proving to be a more interesting stock to follow than I expected when I first talked about purchasing it.

Here’s a recap of the latest news (some bad, some encouraging):

Feb 21 - Customer lawsuit #1. Plaintiffs with mortgage problems.

Feb 21 – Customer lawsuit #2. Plaintiffs have financing issues and claim the value of their homes was misrepresented.

Feb 23 – Customer lawsuit #3. More mortgage and down payment issues.

Feb 27 – DHOM 2005 earnings announcement. In summary, revenue down, income down, sales down, backlog down. Includes the comment, “we do not expect to be profitable for the first quarter of 2006.”

I also listened to Dominion’s Feb 28th earnings conference call. The webcast will be available to listen to until later in May. They make lots of comments about the initiatives underway to turn things around, e.g., reducing excess land inventory, paying down debt, and the Wells Fargo home mortgage venture.

Feb 28 – Dominion Homes makes a deal to have Wells Fargo (NYSE:WFC) take over its mortgage services. I think Dominion’s new CFO is starting to earn his keep!

Feb 28 – A bizjournals.com article discusses the Wells Fargo venture. It also says that DHOM is being subjected to “questions” from the State of Ohio and a HUD (US federal government agency) audit.

Feb 28 – Marketwatch publishes an article discussing the downturn in the US housing market. Mentions “troubled” Dominion Homes and another homebuilder also experiencing a decline in sales.

Mar 1 – An article in the Columbus Ohio newspaper, The Columbus Dispatch, on the Wells Fargo deal starts out “A plan to spin off Dominion Homes’ mortgage division will make it impossible for the public to continue tracking the embattled home builder’s loan defaults.” This newspaper, in the middle of Dominion’s main market, has lots of articles related to Dominion Homes and problems in Ohio’s housing market and mortgage financing.

Mar 2 – Dominion Homes hires a new President and COO. This is the second new “C” level executive hired since the beginning of the year.

Exciting times!

Despite all of this, the stock hasn’t moved as much as you might expect in the last couple of weeks. Maybe most of the negativity has already been absorbed into the stock price. It did drop from about $20 to $10 last year.

I’m maintaining my stop loss at $7.00.