Monday, October 4, 2010

Bookkeeping: Selling Some Gafisa (GFA) Along with Sam Zell

Gafisa (GFA) continues some strange performance - it spiked Friday (gapping up) and today is surging in a bad market.  My first thought is selling pressure by Equity International (Sam Zell's group) has abated as news arrived after the close Friday that EI had finished a good sized sale of shares.  I had not realized how low the exposure in GFA Zell has now, it is below 3% whereas it was around 20% a few years ago.

  • (Friday) Equity International (EI), the privately held company focused on investing and building world-class companies outside of the United States, announced today the sale of approximately 13.2 million common shares of Gafisa S.A. (Bovespa:GFSA3; NYSE:GFA), a leading national homebuilding company in Brazil, for approximately R$175 million (US$103 million). EI retains an approximate 2.6 percent stake in the Company.
  • “Our enthusiasm for Brazil has never been higher and we continue to look at opportunities in both new and existing sectors. We are confident that Gafisa and BR Malls will continue to lead the homebuilding and retail property sectors, among the most vibrant in Brazil,” said Gary Garrabrant, EI’s chief executive officer. “Today’s transactions simply reflect the ongoing execution of EI’s disciplined and proven monetization philosophy.”
  • Headquartered in São Paulo, Gafisa is one of Brazil’s leading homebuilders distinguished by a diverse portfolio in all major markets and an unparalleled product mix that caters to all income segments. The Company has completed more than 1,000 developments and 11 million square meters of housing across 100 cities throughout Brazil. EI made its original investment in Gafisa in 2005 and a follow-on investment two years ago. During this time, EI helped extend Gafisa’s leadership position, transforming the Company into the first national homebuilder in Brazil.

Whatever the case, the stock presents a conundrum since it is breaking out nicely but in a market that is touch and go with key support areas.  In the 'student body left' trading world we live in, if the S&P 500 breaks - everything is going to go with it.  (of course Mr. Tepper says we don't have to worry about such things because Bernanke is happy to support the stock market)

I am going to sell half my stake here and look to rebuy at some point on a 'gap fill' around $15.50 near Thursday's highs.  (about 7% lower than here).  I restarted the position in early September in the $14.40s so a 15% gain in a month which is not bad considering a market darling momo play like Netflix did 30%!

[Mar 30, 2009: Restarting Gafisa as Sam Zell Increases Stake]
[Oct 22, 2008: Sam Zell Increases Stake to Gafisa to 18.7%]

Long Gafisa in fund; no personal position

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