GFA, which was previously a mainstay mid-cap staple, is close to being a micro-cap company at these prices:
"There are five basic groups: mega-cap (market cap over $200B), large-cap ($10B–$200B), mid-cap ($2B–$10B), small-cap ($300M–$2B), and micro-cap ($50M-$300M). Market cap is not always an accurate indication of value because it does not account for debt and other factors."
Something to consider:
Current market cap is approximately $550 million USD.
One time expenses noted in 2Q report:
"The main non-recurring events that impacted free cash generation were: (i) R$58.5 million used in the share buyback program; (ii) the payment of R$63.6 million in taxes on the sale of Alphaville; and (iii) the payment of interest on own capital in the amount of R$130.2 million."
This totals to $252 million BRL or $110 million USD.
Assuming all other factors remain equal, next quarter's earnings woudl equate to 20% of the market cap.
I missed shorting the downwave. Just managed to even up my annual highs (with the help of a couple of well-timed XIV trades) and killed off 80% of my longs this morning. I am going on vacation soon and don't want to have to be sweating my positions.
There is definitely an argument to be made for more upside possible here. However:
1. $VIX filled underlying gap.
2. Diagonal resistance on $SPX shows around 1955 (around 50dma).
3. Seasonality factors favor the bears.
4. Bond sales today and tomorrow followed by the Fed remarks on Wednesday.
I didn't listen, but I did work through the Quarterly report this morning, which looks rock solid. The debt/equity ratio in particular stood out at -16% ex-operational debt.
Cash flow and margins also looked good, and Tenda's margins increased substantially on the newbuilds. I think they would have come out positive were it not for the sales disruptions caused by the World Cup and what looks like a one time expense related to Alphaville stock options (though I couldn't tell whether that was booked this Q or next).
Technically, the position is very strong with several indicators looking like a bottom. I plan on holding until the $3s.
Aug 8 (Reuters) - Brazilian homebuilder Gafisa SA posted a small second-quarter loss, weighed down by the losses of its low-income Tenda division, as it made progress toward returning to profitability.
Gafisa said its net loss amounted to 851,000 reais ($372,935), a substantial improvement on its 14.1 million reais loss a year earlier, according to a securities filing late Friday. Seven analysts in a Reuters poll had forecast a 20.8 million reais profit, on average.
Gafisa has been working to rein in expenses and boost margins in recent quarters after a rapid expansion into untried regions led to cost overruns and big quarterly losses.
Gross margins improved in the quarter to 35.7 percent from 28.1 percent a year earlier.
Last month, the company said it had launched 413.8 million reais worth of new projects in the second quarter, up 66 percent from a year earlier. Total contracted sales reached 433 million reais, a 12 percent gain from the second quarter last year.
Gafisa announced plans late last year to spin off Tenda, which should be concluded in 2015. The group acquired Tenda in 2008, but a series of costly budget overruns and canceled contracts in the unit have weighed on Gafisa's bottom line.
Sales cancellations fell on a quarterly basis in the Tenda division, though that was partly offset by a rise in cancellations in the mid-range division, which also uses the Gafisa brand name.
The company said Tenda was on track to become profitable again, with net sales of 181.7 million reais for the quarter, the division's best result since the last quarter of 2011.
Gafisa saw a cash burn of 1.3 million reais, compared with an 84 million reais cash burn in the second quarter of 2013.
Adjusted earnings before interest, taxes, depreciation and amortization rose to 89.8 million reais from 26.5 million reais in the first quarter, beating analysts' estimates of 76 million reais but lower than 93.9 million reais a year earlier.
($1 = 2.29 Brazilian reais) (Reporting
Heavy volume is probably occuring in anticipation of earnings. GFSA3 appears to have hit some diagonal support on the daily and weekly charts at 3.10 as well. I suspect it will hold this time...
"aco,where do I sign up for that class on technical trading?"
I implement a lot of what evilspeculator does - check the cheat sheet. Other than that, its pretty easy to find information on bollinger band strategies, candlestick patterns, and gap trading strategies online. Most of what I do with GFA is trade when it stretches outside of the bollinger bands and watch diagonal support levels (especially when they form a diagonal channel.
If you trade GFA - and you should trade it - you should do so with the understanding that like many low float small caps, it is heavily manipulated by the MMs and act accordingly. The first minutes of the ex-div day are the best example of that.
Having said that, much of the recent price fall is mostly macro-based. Brazil and other EMs are very vulnerable to heavy movements in the US markets. This instance has been compounded by the fact that Brazil is Argentina's heaviest trading parter - recall that the Argentina default is what touched this off. There is undoubtedly insider trading, but the HFs tend to work more off of TA and always leave themselves an escape hatch. Case in point, FV at the close was $2.77.
GL and thanks for posting.
It looks like Tenda managed to sell down a lot of inventory this quarter. Dissolutions were high while launches were down almost 50% from last Quarter. It sounds like everything is going as planned. Barring any surprise administrative costs, or other shenanigans, I think they'll post a profit - no idea how much. Earnings are Friday, not tomorrow, according to the IR site.
Seeing some technical support on the ADR daily (horizontal) and GFSA3 (diagonal). The currency could be due for a reversal if we continue in the same range as well. Hopefully we'll get a swing upward into earnings.
The time spent below the daily BB is a point of concern as is the break below the 200sma. Of course, the overall change in tone in the SPX is also troubling...
I'm betting that you're correct. I entered at $2.55. In any case, the majority of the loans are due back on July 15th.
Yep. One thing to keep in mind is that if Rioforte fails to pay back the loan, PT's particiaption in the merged company could fall from 38 to 20%. I think its all pretty much priced in at these levels though.
As of Q1, PT has 1.22 billion euros in cash and 7.2 billion euros in debt. They purchased 897 million euros in paper. This is really a problem of credibilty since this transaction was opaque and directed by board members with a vested interest in Rioforte's holding company.
First time in a long time I can remember the BVSP being almost flat while the US markets were freefalling. I think it has something to do with the World Cup and its potential impact on the elections. I expect Brazil to lose to Germany today, which could swing support for the opposition candidate.
Nice. I completely missed shorting this move. I have been away from my computer much of last week. Still mostly cash with small amounts of NVDA and MSFT.
I think this move has the potential to fall another 40 SPX points or more though. This doesn't feel like another shallow pullback.