On Homebuilders - Klabin Segall De-Rating

Incredible was the de-rating process through which Klabin Segall went this past half month. The stock was, as can be seen on the graphs below, trading equally on a relative basis to PDG Realty, Cyrela, and also Gafisa (graph not shown), but then sharply underperformed this group of stocks in the last 15 days. To me, this indicates that the market saw Klabin as a prime player among local homebuilders, but that it quickly changed its mind lowering the stock to the second tier of performance.





The de-rating process looks reasonable, but its amount was excessive to us, as Klabin appears to have a supperior management and balance sheet control when compared to "distressed" players, Abyara, Tecnisa and so on, to name a few. It is also important to note that KSSA successfuly renegotiated the convenants on its debentures, that were about to be triggered, and that gave us increased confidence that creditors are confortable with management. More to come.

Related Words: Klabin Segall, Gafisa, Cyrela, PDG Realy, Homebuilders, Stocks, Relative Value, Long-short.