Monday, November 30, 2009

Bookkeeping: Closing Meritage Homes (MTH)

This market is confusing; I face a swathe of quite awful charts in the small and mid cap arena, while every institutional manager on the planet rushes into (AMZN) and a handful of similar ilk.  The market leadership seems to narrow by the week, but it is almost entirely located in names represented in the well known larger cap indexes.

Meritage Homes (MTH) is another name that is breaking down; this was our proxy for exposure to the government sponsored "housing recovery"; we started the position in May.  Now that the seasonal strength in the sector is over, we can go into hibernation for some months and then begin getting ourselves into a lather when (as it does EVERY year) housing data starts 'showing signs of improvement' next spring.  I will remind myself to load up on anything housing related around next March since the green shoot crowd will be out in force and in awe (remember, we have no memories) that housing sales in June 2010 will be stronger than April 2010.  Even though it happens every year.

But for now I am more inclined to short MTH than be long, so we're expunging the last small piece (0.1% exposure) in the portfolio.  The majority of this position was expelled on October 8th at $19.22, so we missed that spike up afterwards and the ride down.   As with much of the market, another stock just churning.

Frankly I am having trouble finding good charts that don't involve a PE ratio in excess of 40+... in any sector. When I am working this hard to find long ideas, it should be telling us something.

No position

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