Abdalla Al-ayrot
Long only, deep value, special situations

Gafisa S.A.: Real Turnaround With Near-Term Catalysts And Longer-Term Value

Investment summary

Gafisa S.A (NYSE:GFA) is currently trading at a huge discount to its tangible value and intrinsic value. This is confirmed by the divestment of 70% of the company's subsidiary, Alphaville, is grossing the company more than half its current market cap. The buying parties are currently in the Due Diligence process. The company expects the deal to go through in late 2013.

The company's two other SBUs: Gafisa and Tenda, have undergone turnarounds, which have already shown clear signs of progress. The financial performance of the two segments has been suffering since 2011, due to an unprofitable expansion in both segments.

The Gafisa segment has decreased its exposure to low-margin non-core markets from 20% of its...

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