Why Now

Today I replaced nearly half my SPY short with a variety of other short positions. I shorted Simon Property Group (SPG), the homebuilder index (XHB) and the equal weight retail index (XRT). This is a reflection of my view that the consumer will continue to deleverage and that the housing recovery will be prolonged.

The reason that I chose this week is that I wanted to wait until after Christmas before shorting retail. I have found that retail stocks are typically strong starting in August and leading to Christmas. The homebuilder index actually contains many retailers like Home Depot. I outlined earlier here and here why I believe now is the right time to short Simon Property Group.


CP said...

Why Simon? Did you look at other REITs?

Tsachy Mishal said...

- I wanted the short exposure to retail.
- I prefer dealing in liquid large cap names.
- The insider selling last week.

I am certain that plenty of other REITs make great shorts but I did not look at other names.

Tsachy Mishal said...

Forgot the most important one:
- The very full valuation.

CP said...

I agree with you that retail REITs are the way to go - I should have said why SPG out of that class?

I agree that SPG gets way too much respect and hence the high valuation.