Thursday, June 3, 2010

Bookkeeping: Closing Lennar (LEN) - Will Revisit

It looks like 2010 Kool Aid is not following in the footsteps of 2009 Kool Aid as I anticipated in housing. A year ago, people were excited and clapping in earnest when housing figures improved in the spring... as they do every year. Then they were excited as housing figures improved in the summer... as they do every year. Housing stocks shot up! Pundits cried housing bottom! Housing stocks soared! I thought this would repeat in 2010 when people would be 'shocked' (yet again!) that housing figured were better in May than they are in January. It looked like a great idea mid April but has since been a dud. While these stocks ramp the day housing news is announced - they are doing nothing most other days. It seems too many Americans are busy living in homes rent free to be bothered to be buying homes - especially if the government is not going to hand them $8000 or $6500. Even with record low mortgage rates and record affordability.

With that I shall vanquish Lennar (LEN) in the lower $16s with a 10% loss on the 0.5% exposure I have remaining. I sold a lot in the $17.60s May 17th (3% loss), and other shares higher for profit so all in all I think it will be a "flat" return from the inception position April 5th. (this trade worked great the first 2-3 weeks!)

I will still keep an eye out on the sector since Kool Aid is contagious and all it takes is HAL9000's algorithm saying "0101001110001010 housing 010100101" and the game is back on. But for now natural gas is the new housing for HAL and his cohorts.

No position


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