Group 1 - The New York stock market indices opened higher on January 9, 2025, with the Dow Jones Industrial Average rising by 237.96 points to close at 49,504.07, a gain of 0.48% [1] - The S&P 500 index increased by 44.82 points to close at 6,966.28, reflecting a rise of 0.65%, while the Nasdaq Composite Index rose by 191.331 points to close at 23,671.346, marking an increase of 0.82% [1] - Among the S&P 500 sectors, nine out of eleven sectors saw gains, with the materials and utilities sectors leading with increases of 1.80% and 1.24%, respectively [1] Group 2 - The U.S. Labor Department reported that 50,000 non-farm jobs were added in December 2025, below the market consensus of 55,000, with previous months' job additions revised downwards [1] - The unemployment rate for December 2025 was reported at 4.4%, a slight decrease from the revised rate of 4.5% in the previous month [1] Group 3 - The preliminary consumer confidence index for January 2025 was reported at 54, surpassing the previous month's 52.9 and the market consensus of 53.5, marking the highest level since September 2025 [2] - Consumer inflation expectations for one year remained stable at 4.2%, the lowest since January 2025, while the five-year inflation expectation rose from 3.2% to 3.4% [2] Group 4 - D.R. Horton, a major U.S. homebuilder, saw its stock price increase by 7.8% following President Trump's announcement to request Fannie Mae and Freddie Mac to purchase mortgage bonds to lower interest rates [3]

Market Performance - U.S. stocks reached record highs, with the S&P 500 climbing 0.6%, the Dow Jones Industrial Average adding 237 points (0.5%), and the Nasdaq composite gaining 0.8% [1] - The positive market movement followed a mixed U.S. job market report, indicating a potential delay in interest rate cuts by the Federal Reserve [1][2] Job Market Insights - The U.S. Labor Department reported that employers hired fewer workers in December than expected, although the unemployment rate improved, suggesting a "low-hire, low-fire" state in the job market [2] Company Highlights - Vistra's stock surged 10.5% after signing a 20-year electricity supply deal with Meta Platforms, reflecting a trend among Big Tech companies to secure energy for AI data centers [3] - Oklo's shares increased by 7.9% following its agreement with Meta Platforms to secure nuclear fuel for a facility in Pike County, Ohio [3] Housing Market Developments - Homebuilders experienced strong performance after President Trump announced a plan to lower mortgage rates by proposing the purchase of $200 billion in mortgage bonds [4] - Builders FirstSource saw a 12% increase in stock price, while homebuilders like Lennar (up 8.9%), D.R. Horton (up 7.8%), and PulteGroup (up 7.3%) also performed well [5] Automotive Sector Challenges - General Motors' stock fell by 2.7% after announcing a $6 billion hit to its results for Q4 2025 due to a pullback from electric vehicles, in addition to a previous $1.6 billion charge [6] - The decline in demand for EVs is attributed to fewer tax incentives and relaxed fuel-emission regulations [6] Company Earnings Reports - WD-40's stock dropped 6.6% after reporting weaker-than-expected profits, although the CFO attributed the results to timing issues rather than demand [7]

Group 1 - There is still a significant demand for new housing in the market [1] - Builders are expected to provide incentives to attract buyers [1]

Financial Institutions - Goldman Sachs Group Inc. (GS) received a significant price target increase from BMO, which raised its target to $980 from $785 [2][9] - Truist Securities also lifted its target for JPMorgan Chase & Co. (JPM) to $331 from $330 [2][9] - Wells Fargo downgraded D.R. Horton, Inc. (DHI) to Equal Weight from Overweight, cutting its price target to $155 from $180, indicating a more cautious outlook on the homebuilder [3][9] Geopolitical Developments - Ukrainian drones reportedly struck Russian missile, ammunition, and oil depots in the Kostroma and Lipetsk regions, intensifying ongoing hostilities as President Zelenskiy arrived in Paris for talks [4][9] International Trade - China's Commerce Ministry imposed export controls on dual-use items to Japan, signaling potential shifts in international trade relations [6][9]

Industry Overview - The housing market is struggling as high mortgage rates deter potential buyers, leading sellers to refrain from lowering asking prices [1] - Additional challenges include aggressive immigration enforcement affecting the construction labor force and high tariffs on building materials like lumber, aluminum, and steel [1] Company Analysis: Lennar Corp. - Lennar reported a nearly 6% year-over-year revenue decline in Q4 2025, with shrinking margins [3][4] - Gross margins fell to 17% in Q4, with expectations of further declines to 15-16% in Q1 2026 [4] - The company projects full-year 2026 deliveries of approximately 85,000, significantly below market expectations [4] - LEN shares have dropped over 20% year-to-date, with bearish indicators suggesting further downside [5] Company Analysis: Meritage Homes Corp. - Meritage Homes, with a market cap of $4.6 billion, reported a Q3 2025 revenue of $1.4 billion, missing estimates by over 6% [6][7] - Margins fell from 21.4% to 20.1% in Q3, and the company's spec business model may lead to increased liabilities in a slowing market [7] - Despite a brief share price increase, MTH shares have since declined, indicating collapsing momentum [9] Company Analysis: D.R. Horton - D.R. Horton, with a market cap of $42.5 billion, reported a revenue decline of only 3% year-over-year, outperforming many competitors [11] - The entry-level housing market remains stagnant, with many potential buyers unable to make down payments or unwilling to move from low-rate mortgages [13] - The company's fiscal Q4 2025 margin dropped to 20%, and the stock has decreased by 15% since early December [13][14] Company Analysis: NVR Inc. - NVR operates an asset-light business model and has seen a revenue decline of 4.5% year-over-year in Q3 2025 [16][18] - Although NVR shares are down only 10% year-to-date, bearish momentum is building, with technical indicators suggesting a potential dip [18] Company Analysis: Tri Pointe Homes Inc. - Tri Pointe focuses on high-net-worth areas but faces challenges as high mortgage rates prevent homeowners from moving up [19][20] - Despite beating recent earnings projections, revenue is declining year-over-year, and management has lowered margin guidance [21]

Core Insights - The Meridian Hedged Equity Fund reported a return of 1.67% in Q3 2025, underperforming the S&P 500 Index which returned 8.13% and the CBOE S&P 500 BuyWrite Index which returned 3.53% [1] Company Analysis: D.R. Horton, Inc. (NYSE:DHI) - D.R. Horton, Inc. is the largest homebuilder in the U.S. by volume, focusing on entry-level and first-time buyer segments [3] - The company reported a one-month return of -6.51% and a 52-week gain of 2.42%, with shares closing at $144.47 and a market capitalization of $42.194 billion on December 23, 2025 [2] - D.R. Horton demonstrated strong operational efficiency, with better-than-expected home closings and new orders, resilient gross margins, and a 2% year-over-year decline in construction costs [3] - The company raised its share repurchase guidance, indicating confidence in future cash flows [3] - Despite its potential, D.R. Horton is not among the top 30 most popular stocks among hedge funds, with 61 hedge fund portfolios holding its stock at the end of Q3, down from 64 in the previous quarter [4]

Group 1 - D.R. Horton (DHI) reduced its holdings by $199 million in Q3 and has completely exited its position [1][2] - The company initially invested in Q3 2023, betting on a recovery in housing demand; however, since the second half of 2024, even with declining interest rates, the real estate stocks have not shown a strong rebound [1][2] - The motivation behind the divestment was to cut losses and execute a tactical retreat, reflecting Warren Buffett's principle of not being overly attached to investments [1][3]

Industry Overview - The U.S. housing market has shown signs of recovery in late 2025, with existing home sales increasing by 0.5% month over month in November to an annualized rate of 4.13 million units, the highest in nine months [4] - The National Association of Realtors (NAR) anticipates a 14% increase in existing home sales for 2026, driven by improved inventory, affordability, and lower mortgage rates [5] - The Zacks Building Products - Home Builders industry has underperformed compared to the broader Construction sector over the past six months, but mid to long-term prospects remain promising [2] Company Insights Century Communities, Inc. (CCS) - Century Communities focuses on affordable single-family homes and has a land-light operational model, which positions it well for a rebound as mortgage rates ease [13] - The stock has a Zacks Rank of 2 (Buy) and has increased by 7.9% in the past six months, with 2026 sales and EPS estimates expected to rise by 7.2% and 34.2%, respectively [14] D.R. Horton, Inc. (DHI) - D.R. Horton targets first-time and move-up buyers with affordable single-family homes and has improved operational efficiency [18] - The stock has a Zacks Rank of 3 (Hold) and has risen by 14.4% in the past six months, with sales estimates for fiscal 2026 expected to improve by 0.2%, although EPS estimates are projected to decline by 1.2% [19] Lennar Corporation (LEN) - Lennar has maintained substantial new orders and backlog, with home deliveries in Q4 fiscal 2025 increasing by 3.7% year over year [15] - The stock carries a Zacks Rank of 3 (Hold) and has decreased by 2.4% in the past six months, with 2026 sales and EPS estimates expected to improve by 0.2% and 5%, respectively [17]

Company Overview - D.R. Horton, Inc. (DHI) is a leading homebuilding company based in Arlington, Texas, with a market cap of $42.8 billion, constructing various residential homes and providing related services such as mortgage financing and residential lot development [1] Earnings Expectations - DHI is scheduled to announce its fiscal Q1 earnings for 2026 on January 20, with analysts expecting a profit of $1.98 per share, a decrease of 24.1% from $2.61 per share in the same quarter last year [2] - For fiscal 2026, analysts project DHI to report a profit of $11.43 per share, down 1.2% from $11.57 per share in fiscal 2025, but expect EPS to grow 14.3% year-over-year to $13.06 in fiscal 2027 [3] Stock Performance - DHI shares have gained 7.2% over the past 52 weeks, underperforming the S&P 500 Index's 16.5% return but outperforming the State Street Consumer Discretionary Select Sector SPDR ETF's 6.8% increase during the same period [4] Analyst Ratings - Wall Street analysts have a "Moderate Buy" rating on DHI, with 20 analysts covering the stock: seven recommend "Strong Buy," 11 suggest "Hold," and two indicate "Strong Sell." The mean price target for DHI is $164.27, suggesting an 11.8% potential upside from current levels [6] - DHI shares surged 4.1% on December 3 after BTIG initiated coverage with a "Buy" rating and a $186 price target, reflecting a favorable outlook for the U.S. housing market [5]

Core Viewpoint - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Group 1 - The analysis is intended solely for informational purposes and should not be interpreted as professional investment advice [3]. - There is a clear disclaimer regarding the lack of any stock, option, or similar derivative positions in the companies mentioned, indicating a neutral stance [2]. - The article expresses the author's personal opinions and does not reflect any business relationships with the companies discussed [2]. Group 2 - Past performance of stocks is noted as not being a guarantee of future results, underscoring the unpredictability of market conditions [4]. - The article clarifies that no recommendations or advice are being provided regarding the suitability of investments for particular investors [4]. - It is mentioned that the authors of the analysis may not be licensed or certified by any regulatory body, which could affect the credibility of the insights provided [4].