If you think this is going BK…go away. I just don’t see it.
We’re at $500 and two months ago Sam Zell offered $700 million for Gafisa and Tenda. Insiders should use their own pockets to buy the stock here. The cash on hand is to keep the rating agencies at bay. We need a government pro growth agenda big enough to clean the balance sheet but low enough to let mid size builders bankrupt. GFA should focus on building a fortress in its Balance Sheet. Management mistake: believing that Brazil is the 6th largest economy…debt to gdp is great…yadadada…Brazil is a dump. They should understand this and take care of the balance sheet…wise usage of revolving credit facilities…sell if you may a % stake of Alphaville…pace your growth. Caution and cleaning the debt will bring foreign institutional buyers into the stock.
My point is at $2.5 the risk/reward favors longs. Disclosure: I'm long $3.8 and I sell out two days before the final game of the world cup...
ps. Hey, with the dollar so expensive, at least rich Brazilians will stop buying houses in Florida.
Does $2.50 favor longs when the wider global economy is precariously poised on the precipice? I don't know about you, but this "sucker could go down" in the infamous words of our former illustrious president. A Greek exit and yield spike on Spanish and Italian debt becomes practically unmanageable. Do I think they let it get that far? Probably not, but any response is mere can kicking and will only result in a return to the beginning where we will be dealing with the fallout of increasing debt loads on a reduced timeframe. Stimulating measures are losing their potency in the face of what everyone knows awaits them after the crack hit high wears off.
ACO is correct that the global economic picture determines the direction here. GFA is at the whims of the markets. A leaf in the wind....If things get really bad, Brazil will suffer tremendously. I wouldn't be surprised to see them to contract by Q4.