According to data from Bloomberg, traders are increasing bets that PDG, Brazil’s worst- performing homebuilder in 2012, will plunge further after short positions returned more than 60 percent in the past year.
The ratio of borrowed shares in Brazil’s third-biggest homebuilder exceeds 16 percent, the third highest among companies on the benchmark Bovespa index and up from 9.5 percent at the start of the year.
MRV has the highest short positions among developers and the second-highest on the Bovespa at 20 percent of total float. The ratio of borrowed shares also exceeds 10 percent for builders Rossi, Cyrela and Gafisa.
New home sales in Sao Paulo, Brazil’s biggest city, peaked in 2010 and plunged 21 percent the following year, when new houses and apartments outpaced demand by a third.
Standard & Poor’s said in a Dec. 21 statement that it has a negative outlook for PDG’s BB- credit rating, three grades below investment quality.
“Investors are worried about demand for homes. And demand for homes is sort of cooling”, said an analyst.