In his report Tilson digs deep into the mortgage market (delinquencies, housing affordability, $8,000 first-time home buyer credit, repeat buyer tax credit (expired), housing inventory, shadow inventory, default rates, foreclosures, Case Shiller home price fall, underwater homes) and $ITB valuation based on homebuilder price/book value, inventory/equity and debt/equity ratios. A nice piece of work here.
Whitney Tilson's T2 Partners Unveils Latest Mega-Case Against Housing And The Homebuilders Read the 35 page report at BusinessInsider.com.
ITB (iShares Dow Jones US Home Construction Index)
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"Housing prices, he said, will likely grow 3 percent to 5 percent this year and increase by 8 percent to 12 percent next year. His optimistic outlook is not shared by everyone and Fannie Mae and Freddie Mac recently offered much more gloomy forecasts." (Reuters)Paulson's funds scooped up 5 million shares of Beazer Homes in the first quarter (Reuters). Of course his fund is probably hedged with cheap credit default swaps! Remember all of the option activity in BZH, XHB, HOV (homebuilder ETFs) not too long ago playing or hedging the breakout? The ceiling break on ITB ultimately failed for now. We shall see if it holds at the 200DMA ($12.82). Look at the massive red volume recently, someone got out or short in size.