Eddie Lampert, billionarie CEO of the $11.6 Billion hedge fund ESL Investments, has been an active buyer lately. And what are they buying?
- Home builders
- Mortgage companies
- Home Improvement chains
They’re so positive on Home Improvement that they have a position in Home Depot valued at a whopping $590 Million (about 22.7 million shares).
Why would a multi-billion dollar hedge fund be BUYING into the very companies that suffer most under a real estate decline? I’ll tell you what’s not going on:
ESL Investments isn’t investing their money in the real estate business because they expect a long-term real estate market failure.
ESL - like Goldman Sachs’ acquisition of SIV Porfolio/Cheyne Finance - believes that the real estate market is nearing or at it’s bottom, and they are gearing up for the inevitable bounce.
Of course, the mere presence of mega-billion-dollar companies actively buying into a beleaguered housing market doesn’t mean that the end of the market bloodshed is here. Or does it? This much is certain: The more support there is in the marketplace, the more likely we are to see the definitive end of the real estate market weakness.
And I believe the end of that market weakness is very near. Your comments & questions are always welcomed here on FreeRealEstateTraining.com!
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6 Comments So Far»
Very interesting. My gut tells me the bottom is near as well.
But let’s also not forget that most US markets are going through little more than a buyer’s market in terms of real estate. Values have dropped marginally or not at all for most. Some of the biggest “bubble” markets (Las Vegas, Phoenix, nearly all of FL, etc.) are getting hit hard b/c they over-inflated so much. But most of the country didn’t go through the “boom” they did, so they aren’t having nearly the correction in values.
We’re all feeling some pain from the larger markets lurching, as well as gas prices and high foreclosures. But most of us aren’t in the direst of straights in terms of falling RE values.
Food for thought.
My CPA’s response? “Eddie Lampert also bought several hundred million dollars worth of Citicorp just before the sub-prime mess at $55 per share. It’s now $17 per share.
Fair enough! Makes me think the guy has even more reason to get it right this time, doesn’t it! Thanks for your comments. — Bryan Ellis | FreeRealEstateTraining.com
great foresight
Remember, real estate is typically a LOCAL ISSUE. In the local market here there are zipcodes with many, many foreclosures and REO’s. As close as 15 miles away from some of these areas there are zipcodes appreciating. It seems from history of business cycles we may be nearing the bottoming out in the hard hit areas - but hedge funds have a lot more money to play with than most of us and can absorb some mistakes in timing. Be a good, diligent and cautious student of your own market and find the deals!
Very true, Mike. My point is that the increasing number of high-dollar business acquisitions centered around the real estate business is a fundamentally positive sign for that thing we call “the” real estate market, which may of course be different than the market in your local area. These types of acquisitions represent a “macro” positive more than a “micro” positive. — Bryan Ellis | FreeRealEstateTraining.com
Bryan,
I haven’t heard anyone comment on the fact that this is an election year. Traditionally, investors of all sorts are in a “sit back and see what happens” mode prior to seeing who is elected and where they stand on issues such as the Real Estate market. It seems to me that this also supresses the Real Estate Market until a clear picture developes of who is elected and what they can do for the country in terms of economic stimulus. What are your thoughts and predictions on this?
Jimmy - that’s a really excellent point. My gut instinct on the matter is that the election may be somewhat less influential this year, since the economy is the dominant news issue already. But your point is very valid, particulary considering the facts that Barack Obama has literally no economic policy experience and John McCain’s primary strength is in defense and not economics. Very good thought! — Bryan Ellis | FreeRealEstateTraining.com
Let’s load up on apartment houses now and then flip em’ like pancakes when the market rebounds!
That’s an idea with some merit! — Bryan Ellis
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