Faith in stocks is difficult to find, but I am trying...

I hate this market's future but that won't stop me from looking for alpha and compelling firm-specific risk. Therefore, I threw some money at Gafisa (GFA) yesterday. The stock is trading well below its book value, has a forward P/E ratio of 4 (I estimate 09 EPS @ $3.00) and its PEG is below 1. GFA is so cheap that Sam Zell has invested some more money into the company as well (increasing his stake to 18.7%). I figure if GFA is good enough for Zell (who made his money in real estate) then GFA should be good enough for me.


Once again this is a long term investment (minimum 5 year horizon). I don't expect a V-shaped recovery in GFA anytime soon, but the stock is down 49% YTD (about as close to a washout as possible). Therefore I figure that GFA will be higher in 12-24months than it is right now. Of course if there is a spike up to $20 I will not hesitate to sell some shares, because 30%-40% moves do not come often...unless we're talking about this market ;-)

Position: Long GFA (only have 1/3 of a desired position in this stock - will dollar cost average in over next few quarters)

P.S. I am still holding onto my Mosaic position (MOS) for the exact same reasons. Cheap stock, but wrong time (unless you're willing to wait it out - I am only 21 yrs old :-)