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Gafisa S.A. Message Board

  • amendoza amendoza Mar 7, 2013 10:43 AM Flag

    Shouldn't this be over $5 right now.

    Three bidders for a branch. Earnings turnaround. Brazil economy improving. Selling at half book? Everything is positive here.

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    • My worst case scenario - net/net - if Gafisa sells the Alphaville division at the estimated price (there's 3 suitors for it), and if I assume all the company's figures (for their already built housing inventory on hand for sale, and for the receivables R$ that customers owe them) are too optimistic, and I cut ALL of those values by 50% and add the total cash and subtract all the debt - I still get a price between $5.92 to $7.26/share.

      The amount of new cash they would have after the Alphaville sale would equal 80% of all their debt, and that's not taking into allowance their stated assets: R$11.5 BL in inventory and receivables.

      I supposed if a person really wanted to be drastic and sell the Alphaville division, collect on only 50% of their current inventory and receivables (and write off the rest), pay off all the debts, and then take the company out of business (corporate raider style), the liquidation value would be about $6 or more.

      But if it was broken-up into pieces by selling each of the divisions as a separate business entity, it would probably bring $10/share. I think that's why Sam Zell wanted to buy it at $7.50/share. So he could develop the business, or sell if off in chunks, and make 30% on the deal.

      All of these scenarios are much higher than the $4 and change it's trading for now. At a certain point - no matter how I look at this company from a worst case scenario - I see more value for the shares than they are now trading at.

      I am kind of amazed that the market doesn't see it, or isn't interested, but I felt the same way about Brookfield Properties (BRP) when it was at $8 and at $10 last summer. Now it's bumping up against $23 with seemingly no top in sight. Just last month their were two analysts on the conference call for the first time. By the time it gets coverage and notoriety, the stock could be in the $30s.

      It has $4.5 BL net (after costs) in developed-lots and land under development in the US. and Canada.

    • Stocks don't rise or fall just because you want them to....

      I'm turning green with PBR envy.

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