Bookkeeping: Adding Back Gafisa (GFA) in Scale

Gafisa (GFA) is trading back down almost text book post earnings; could not ask for a better trade than what we just enjoyed here.

We doubled (0.9% stake to 1.8% stake) the position last Monday near $38
We took out a smaller portion at $43 Wednesday
We took out (down to 0.6% stake) a big position Friday AM at $49.60

We added (back up to 0.9% stake) a small bit yesterday below $45
We added a much larger piece back at $42 this AM

Downside remains first to upper $39s (near $40) - first support - and then at $38 (stronger support) but my largest sell was at $49.60 (Friday) and largest buyback was $42 (today) so we cleared 15% on that transaction in a 2 session period. I'll take that all day, every day.

I'll buy more on a pullback to $38, but for now Gafisa is back to a 2.4% stake. The above trading shows my trading methodology; only in this case it happened in a very short period of time. Layer in; layer out.

Here are the results but they are not in US Pesos, but in the Brazilian Real... so I'll have to convert them later and add some flavor. But unlike most of today's day and age of investor these results don't matter much to me - just like I could care less what the most recent quarterly results are in the coal industry - I am looking forward. The key points to me are the big picture, not the actual numbers from 1 quarter to another - the mortgage market is just beginning in Latin America; the country actually has savers unlike debtors that populate our country; this is the best economy in Latin America; the end. (and yes there is a risk because Brazil actually has inflation unlike our magic country which has no inflation, so their central bank raises rates, unlike ours)

• Our land bank has reached R$11.1 billion and represents almost 59,000 units. Pre- sales, a strong indicator of Gafisa's ability to meet consumer demand, grew nearly 100% over the prior year's quarter, while launches increased 91% compared to the same quarter in 2007."
• "Looking ahead, we believe that the outlook for continued growth in the Brazilian residential housing industry remains strong. We remain confident that the banking system will not change course and will continue to accelerate the rate of access to mortgages, thus continuing to fuel our industry. There are several reasons that support this perspective: savings account balances are expected to continue to grow and regulation requires that 65% of those balances be used toward financing mortgages; even with potential increases in rates, the improved terms and tenors of loans will continue to make monthly payments affordable; and, the Selic rate does not necessarily have a direct correlation to the consumer's mortgage rate. In fact, mortgages funded from savings accounts increased by 88% in this quarter compared to the previous year.
  
• Finally, the Central Bank's decision to control inflation, resulting from stronger-than-anticipated economic activity, and the overall health of the economy will have a long-term positive impact on all consumers and their ability to continue to afford new housing."

Long Gafisa in fund and personal account