IB Net Payout Yields Model

Gafisa Raises $598M Just Below the Closing Price

According to this report if accurate, Gafisa (GFA) got a good deal to close the offering just below the closing price on Sao Paulo at $12.5 reals. Of course the general market has been very strong and GFA has been held down because of this deal so it shouldn't be too surprising that it priced so close to the close. Guess it's too late but my currency conversions aren't coming up as close to the closing US price. Hmm....

Took a gamble yesterday and apparently we'll win out with this pricing. Some of the details of why we're very bullish on this stock.

  • About 20 percent of the proceeds from Sao Paulo-based Gafisa’s sale will go to acquisitions and 35 percent will be used to buy land for construction projects, the company said on its Web site. Gafisa canceled a planned share sale last year.
  • The projected sales value for new projects started in 2010 will climb to as much as 5 billion reais from 2.3 billion reais a year earlier, following a “strong improvement in market conditions,” Gafisa said Feb. 8.
  • As much as 45 percent of the new work will focus on lower- priced housing as Gafisa takes advantage of a government plan to build 1 million homes for low-income families by 2011. Brazil’s economy is expected to grow 5.5 percent in 2010, according to the median forecast of about 100 economists in a central bank survey published March 22.


Mark said…
Main worry is interest rate risk. Brazil surprised me by not increasing rates last meeting but people seem to think its in the cards which of course is never good for homebuilders all other things being neutral. Of course I like the name, but just offering the reason for potential stress.

Both brazil and China have really been lagging this year.
Mark Holder said…
a little increase in the interest rates shouldn't kill any rally. Regardless though thats one of the main reasons i didn't buy back till the 200EMA. I've got a solid exit point just in case.

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