Puts on Homebuilders, Lenders, Retailers, Restaurants, etc.

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Submitted by powayseller on August 11, 2006 - 10:40am

Given that real estate and MEW are on the way down, the beneficiaries of construction and easy lending are going to be hit hard.

Many on these forums know a lot about these companies, and have studied them.

Could you give us a list of PUTs on companies you are buying, and the reason you chose that company? Please include a reasonable price, and where you think it will be at the end of your timeframe.

Thanks in advance.

Submitted by deadzone on August 11, 2006 - 11:01am.

All real estate related stocks are likely to return to their "pre-bubble" values. A conservative estimate that I use is to look at their price around 2001. Just pull up a 5 year chart and you'll see where they should eventually land. I expect all to return to this level or below by early 2008. No science here, just common sense.

Submitted by ybc on August 11, 2006 - 12:55pm.

Puts that I currently hold (somewhat economy and housing related) include CFC, BBY, SBUX. I had some others but sold. But I bought all these when stock prices were higher, so this is not an endorsement to buy them now... It was actually reading this forum about Countrywide's lending practice that gave me the idea to buy a put on the company...my puts on SBUX and BBY's expire in 1/07; while CFC expires in 1/08. I did own put on Wholefood once, but my timing was off, so that was a 100% loss (that's why puts are risky!) I heard someone on CNBC mentioned Bed,Bath and Beyond, but I haven't checked that one out yet.
I had a short on PFCB and SIRI in a "stock contest"game that I play and both did wonders for me:-) Too bad I didn't actually short them.

The same person on CNBC suggested putting PMI companies, I'm not sure, I think that the real risk resides with 2nd loan holders (those piggybank loans), if I know a bank that holds a lot of those, I'd consider buying a put. Any ideas?

Submitted by powayseller on August 11, 2006 - 2:25pm.

I am more versed on the economy than on companies. I have not followed any companies for 6 years. Before I buy stocks, I read most of the financial statements, annual report, and recent SEC filings. I have never bought a Short or Put.

Obvious ones to check are subprime lenders and home builders with concentrations in FL, CA, AZ, NV. Secondary, and probably a better buy now because the rest of the market has not yet figured out we're going into a recession, are car and boat manufacturers, retailers (Home Depot, Lowe's), high end food stores (Whole Foods), restaurants, travel (amusement parks, hotels).

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