Bookkeeping: Closing Out First American (FAF) Post Earnings - Trader Mark

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Bookkeeping: Closing Out First American (FAF) Post Earnings
Oct 29, 2009 06:45 PM UTC

Trader Mark

Return	Risk
-6.84%	MID

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Profile & Performance

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Symbol	Sentiment	Start	Return	Closed
FAF	n/a
AIG	n/a

Via Fund my Mutual Fund:

First American (FAF), a title insurance firm (predominantly) reported earnings today and while they are very good on the quarter they are guiding for some softness go forward. This is not a surprise since Cash for Cul-de-Sacs plus seasonality (more homes sell in spring, summer than fall, winter) kick in. The chart is beginning to weaken as well, so we're going to exit this name which was a backdoor play on "housing recovery" and remind ourselves to load up on every form of housing stock next March so we can cheer the labeling of green shoots that bulls will read into "improving" housing metrics that come in May - August 2010. The same strong period every year...

Let me also add, just as I did after the last Cash for Cul-de-Sacs came out last year, that as version 2 has just been announced and will run through next April... that the realtors association will lobby for Cash for Cul-de-Sac 3.0 right around next March, saying that the housing market cannot run on its own and that as we enter summer 2010 we need a new stimulus. The politicians will say yes sir thank you sir - please deposit your political contributions at the normal time and place, and we'll have yet another extension. Boo yah fellow Americans; this party will just keep going.

As to First American, we were stopped out at $30.50 on the majority of the position , and the rest is heading to the exist over $31. Despite owning this stock during 3 separate earnings reports it smashed analysts estimates, ellent earnings reports along the way [Jul 30, 2009: First American Profit Triples] [Apr 30, 2009: First American Beats by a Mile] we have not really prospered other than 1 big run. Hence, we made a small amount over time but nothing that moved the needle. Obviously we would of been better served to pile into AIG (AIG) since fundamentals mean little and "price action" is the thing.

We'll circle back at the end of winter as we position ourselves for the "shocking" news that May home sales are greater than April, and that June are greater than May, and so on and so forth. Kool Aid!

If you care, some color on FAF's earnings here.

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