Wednesday, February 22, 2012

Chart of the Day: Gafisa

After a horrible 2011, this Brazilian homebuilder has had a surprising start to the new year. Gafisa (GFA) was virtually left for dead as 2011 ended, but the market has probably gotten the biggest shock to see Gafisa rally big time.

Similar to the move in Brazilian wireless provider NII Holdings (NIHD), the chart below shows a much improved technical position from the start of the year.  Not only has the downtrend been broken, but the stock shows signs of breaking out to the upside. Looks like roughly a $1 higher at $7.5 will be the key resistance level.





With all the interest rate cuts in Brazil towards the end of 2011, it really shouldn't be a big surprise that Gafisa at the very least has regained momentum. Looks like much more room to run as well as the stock has only returned to mid November levels.


Stone Fox Capital (position sizes as of 2/17/12)
Stone Fox Capital holds an allocation of 3.6% in $GFA in his Opportunistic Arbitrage Long Only Investment Model
Stone Fox Capital holds an allocation of 3.9% in $GFA in his Opportunistic Arbitrage Investment Model


Disclosure: Long GFA. Please review the disclaimer page for more details. 



1 comment:

Mark Holder said...

The 6% pull back today provides an opportune time to jump in. Apparently investors view the Brazilian housing market as related to the US housing market.