8/24/2006

The overcrowded short trade in the housing stocks



When everybody gets it, best part of the move may be over. What do you see day after day, a negative story on housing. Today all the leading newspapers have negative stories about housing on front page. Expect a magazine cover this weekend or next on housing crash.
So time to cover your housing stock short. It might be time to buy housing stocks if you are value investor. I am buying CHCI,Comstock Homebuilding Comp

Housing Stocks
AVTR,Avatar Holdings Inc
AXR,Amrep Corp
BHS,Brookfield Homes
BZH,Beazer Homes Usa
CHCI,Comstock Homebuilding Comp
CTX,Centex Corp
DHI,D.R. Horton Inc
DHOM,Dominion Homes Inc
HOV,Hovnanian Enterprises A
ITB,iShares Dow Jones US Home Construction Index Fund ETF
KBH,Kb Home
LEN,Lennar Corp Cl A
LEN.B,Lennar Corp Cl B
LR,Lafarge Sa Adr
MDC,M.D.C Holdings Inc
MG631,Residential Construction
MHO,M/i Homes Inc
MTH,Meritage Homes Corp
NVR,Nvr Inc
OHB,Orleans Homebuilders Inc
PHM,Pulte Homes Inc
RYL,Ryland Group Inc. The
SPF,Standard Pacific Corp
TARR,Tarragon Corp
TOA,Technical Olympic Usa Inc
TOL,Toll Brothers Inc
WCI,Wci Communities
WLT,Walter Industries Inc

2 comments:

Pradeep Bonde said...

CHCI has lot of insider buying recently. There are many issues with the company and its balance sheet, but thats what contrarian investing is all about. For these kind of stocks you have to buy and just put it in drawer and open it after few years.

Pradeep Bonde said...

New York Times and Washington Post Both the newspaer had a front page story on housing. Now that is extremely rare for them to look at housing. The thrust of the story was housing is going to crash. Now when you see headlines like that you should just run and buy. They are always late to party.
Popular Blogs I was looking at popular blogs like The Big Picture, Bill Cara and Maoxian. All three had a
negative housing story. In fact The Big Picture had 3-4 negative stories about housing. Now these blogs are read by thousands and are very good contrary indicator, especially The Big Picture Blog.You can always safely bet against CNBC commentators. I was reading the comment on that blog and they were even more negative. So that set off a alert in my mind, hey everyone is so negative on housing and thumping table abut it, lets look at the price action.
The Price Action While all this negativity about housing was being touted by these so called expert, the price action on the housing stock was just consolidating and stocks were not going down. So I decided to look for stock which is down more than 50% from high and had some catalyst, I found CHCI which had insider buying.