DRZ Investment Advisors Takes a Stance on KB Home: An Investor’s Dilemma

What transpired

In a recent revelation to the Securities and Exchange Commission, dated October 17, 2025, a discernible shift in power has been noted at DRZ Investment Advisors-known in the circles of the astute as DePrince Race & Zollo Inc. They have unveiled a new stake in KB Home (KBH), securing possession of 931,823 shares, amounting to a valuation of $59.30 million as of September 30, 2025. This maneuver, executed within the merciless confines of the third quarter, reveals a fund with 183 reportable holdings, yet KB Home strangely languishes outside the sanctum of its top five positions.

Additional insights

This newly acquired position depicts a mere 1.19% of DRZ’s reportable U.S. equity assets, while the whispers of Wall Street resonate, amplifying inquiries about the foresight of such a commitment.

Following the filing, the top holdings reveal:

NYSE:ENS: $117.80 million (2.4% of AUM) as of September 30, 2025
NYSE:BC: $117.12 million (2.3% of AUM) as of September 30, 2025
NASDAQ:NWL: $97.84 million (2.0% of AUM) as of September 30, 2025
NASDAQ:PCH: $94.51 million (1.9% of AUM) as of September 30, 2025
NYSE:PRGO: $78.72 million (1.6% of AUM) as of September 30, 2025

As observed on October 16, 2025, KB Home’s shares stood at $61.32, a stark 27.27% decline over the preceding year-oh, the fickleness of market affections! This fall is underscored by an unsettling alpha of negative 19.42 percentage points when juxtaposed against the ever-looming S&P 500.

Company overview

Metric	Value
Revenue (TTM)	$6.54 billion
Net Income (TTM)	$516.58 million
Dividend Yield	1.62%
Price (as of market close 10/16/25)	$61.32

Company snapshot

KB Home, a vessel navigating the tumultuous waters of U.S. homebuilding, operates across a multitude of regions, harnessing a customer-centric ethos that pledges to provide a medley of home designs and personalized options, bolstered by integrated financial services. A focus on first-time and move-up buyers serves as its compass.

IMAGE SOURCE: GETTY IMAGES.

The enterprise’s financial lifeblood stems from the meticulous construction and sale of single-family homes, townhomes, and condominiums, supplemented by offerings in financial services, such as insurance and title handling, that aim to ease the burdens of homeownership.

KB Home primarily caters to the aspiring buyer-the first-time, the first move-up, the second move-up, and those spirited active adults, seeking refuge in communities crafted for vibrant lives across the fertile grounds of California, Texas, and Florida.

The foolish take

DRZ Investment Advisors’ commitment to KB Home commands attention; a hint that this financial institution perceives latent potential in the struggling stock. Yet, observe! The shares remain far from the illustrious peak of $85.92, a height they reached last October-leaving one to ponder, what drives this company forward?

Consider the reality: in the third quarter of this fiscal year, revenue dwindled to $1.62 billion, a regression from the $1.75 billion garnered a year prior. Expectations for the forthcoming year suggest housing revenues may descend, projected between $6.1 billion and $6.2 billion-an undeniable falling star when compared to last year’s numbers, echoing the harsh truths faced by builders.

Yet all is not shrouded in darkness! The Federal Reserve’s anticipated interest rate cuts could awaken dormant housing sales, a beacon that may illuminate the path for DRZ’s recent stake in KB Home. The company has embarked on a stock repurchase initiative, a confident gesture that reveals a management’s faith in the resurrection of KB Home’s prospects-a total of $188.5 million shares repurchased in Q3, representing approximately 11% of the total outstanding shares across the early financial quarters.

Thus, we can perceive a glimmer of hope for KB Home, as it stands on the precipice of potential rejuvenation, driven perhaps by favorable market conditions and an attractive dividend yield of 1.6%. These facets illuminate the landscape of investment opportunity, making KB Home a consideration for those willing to brave the tides of uncertainty.

Glossary

13F assets under management: The total value of U.S. equity securities managed by an institutional investment manager, disclosed in SEC Form 13F.
Alpha: A measurement of an investment’s performance, as they dance to the tune of a benchmark index, a tale of gains or losses crafted by the hands of active management.
Reportable holdings: Securities bound by the framework of transparency that institutional investment managers disclose in their regulatory scrolls, oft informed by size or type.
Dividend yield: The annual offering of dividends measured as a fraction of a stock’s current price, a vital sign of corporate heartbeats.
Top holdings: The most significant treasures in a fund’s chest, ranked by the might of market value or portfolio weight.
Stake: The weight of ownership or shares clutched in the hands of an investor or institution.
Quarter ended: The closing day of a financial reporting cycle, the time to reflect and account for gains or setbacks.
First move-up buyer: The aspirant homebuyer, lured to larger havens after dispatching their starter home.
Active adult homebuyers: Individuals often weathered with age, seeking homes that cater to their vigorous lifestyles.
Personalized options: Tailored enhancements offered to buyers, crafting a dwelling to fit their aspirations.
Integrated financial services: Financial instruments like mortgages, introduced alongside one’s primary trade.
TTM: The 12-month stretch culminating with the latest quarterly report, marked by the passage of time and transactions.

In the grand theater of investment, only the brave endure tumultuous acts, hoping the curtain rises on fortunes yet unseen. 🌱

2025-10-19 00:42