Oct 2, 2012 Financial Times Article: Brazilian Homebuilders
I try not to let highly believable statistical noise keep from making a good investment at a good price. The only thing I am worried about at this point is a collapse in the Brazilian commodity economy. But at the same time, I think smarter minds than me have priced worries about that in to the stock already - Gafisa has lost 80% of its capitalization in the last two years. This has been the first big pullback since the stock doubled off its lows in the summer time.
It is my experience that home builders are one of the few industries where the fundamentals cannot be "faked". The stocks are highly volatile (just witness the U.S. homebuilders) but the nature of the beast is long long cycles of steady up, followed by a dramatic crash and then sideways, and finally, recovery again.
Maybe Gafisa won't recover this year, but if the bargain-basement buyout price offered it earlier this year was $5.00 - $7.00/share, then there is at least that probability in the price. And in a surprising recovery of Sao Paola real estate? Probably more. At $3.70, I'm willing to stick around to find out.
I have been looking for a chance to buy Gafisa for almost two months. Last week I got it.