M.D.C. once traded for a dime


David Mandarich is President and COO of M.D.C. Holdings. He and Larry Mizel, Chairman and CEO, have navigated rough housing waters before.

Yesterday, I wrote an article quoting Kiplinger’s magazine, which opined that Denver-based M.D.C. Holdings Inc. could be one of the nation’s homebuilding stocks that is in the bargain bin.

Trading at $24.64, M.D.C., is down about 24 percent from its 52-week high. Indeed, it is not far off its 52-week low of $24.09. Because of its clean balance sheet and $1.5 billion in cash, Kiplinger’s made the case it could be the time to buy –  as counter-intuitive as it may seem –  given the carnage in the new home arena.

But trust me, hovering around $25 is nothing. I’ve been around long enough to remember when $25 could have bought you 250 shares of M.D.C., parent of Richmond American Homes. Below, I’ve copied a column I wrote for the Rocky Mountain News in 1990, when the stock traded for a dime.

We all should have been backing up the truck with M.D.C. shares

What I didn’t say in the column is that snapping up the stock in November of 1990, and holding on to it for the next 15 years or so, would have been the investment of a lifetime. M.D.C’s stock peaked at $75.69 (adjusted for splits and dividends) in July 2005. In other words, if you had been gutsy enough to buy it in November 1990 and resisted the urge to sell it when it doubled, tripled, quadrupled and so on, you would have enjoyed an unbelievable 75,770 percentage  return on your investment! I know one person in Denver whose timing wasn’t that perfect, but it also wasn’t an academic “shoulda, coulda, woulda” situation. He initially bought M.D.C. at about $20 a share, bought more when it lost half its value, and when it was trading for less than a quarter he doubled down. A dozen or so years later, he was a retired millionaire and paid cash for a home in Cherry Creek North by selling some of his M.D.C. shares.

Of course, as we’re frequently reminded, past performance is no guarantee of future results. And my crystal ball is no clearer today than it was in 1990. But as anyone who survived that area remembers, prospects for a rebound in the housing market seemed just as remote – if not even dimmer – in 1990 as it does today. And M.D.C. still has Larry Mizel and David Mandarich at the helm – they’ve navigated these rough housing waters before.

Following is the column I wrote for the Rocky.


Rocky Mountain News (CO) – Saturday, November 10, 1990


Ten cents doesn’t buy much.

It will get you 30 minutes on some parking meters and maybe a cup of coffee in some offices.

In 1987, a dime bought a square foot of subleased office space auctioned by BCE Development, the owner of Republic Plaza. That event, something Denver brokers would like to forget, brought worldwide headlines.

Now, another Denver real-estate company is learning the buying power of 10 pennies.

Last week, 10 cents would buy you a share of stock in M.D.C. Holdings Inc., Denver’s largest home-building company.

In fact, if you gave your stockbroker a dime for a share of M.D.C., you would have received change. M.D.C .’s stock fell to an all-time low of 9 3/8 cents Tuesday, close to the lowest stock listed on the New York Stock Exchange.

“It was definitely in the bottom 10,” said Gary Miller, an exchange spokesman.

It’s pretty amazing to find M.D.C.’s stock trading in the penny stock range. In the mid-1980s, it was one of the highest-flying stocks in Denver and the darling of Wall Street.

The stock peaked in 1986 at $22.50. In other words, M.D.C.’s share price dropped about 99.6 percent.

Of course, the economy has not been kind to any homebuilder.

“You look at the stock of any company that has to do with real estate – banks, S&Ls, home builders – they’ve all gotten ripped apart,” said M.D.C president Spencer Browne. “One thing I can’t do anything about is the stock market. The bloom is off the rose.” (Browne has since passed away.)

But M.D.C. has had a special set of problems, most recently charges that surfaced in August linking M.D.C. and its former president, David Mandarich – now a full-time consultant to the company – to the laundering of campaign contributions. Several of M.D.C.’s subcontractors said they had been asked by M.D.C. executives to contribute to political campaigns and then had been reimbursed by the homebuilder. The FBI and state authorities have launched investigations into the charges. (Editor’s Note: A Denver judge later dismissed the charges against Mandarich before the case went to the jury and M.D.C. has long put this chapter of its past behind it.)

Browne said it is hard to say what impact the negative headlines have had on the company.

But a Securities and Exchange Commission filing by M.D.C. noted: “If the statements contained in published reports regarding the scope of this activity are confirmed, the company may be subjected to fines, penalties or forfeitures. Such a result, combined with other facts affecting the home- building industry and the company could affect adversely the company’s liquidity and its ability to fund its commitments.”

Contact John Rebchook at JRCHOOK@gmail.com

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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