Home builders resistant

Toll brother reported a solid quarter today.  What was probably more important than the actual numbers were the comments made by CEO Douglas Yearly.  "We are enjoying the most sustained demand we have experienced in over five years." Yearly wen on to say, "The housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes."

The home builder stocks have been white iron hot.  Needless to say we at DWCM have seen our short position in the home builders swing from profit to loss, loss to profit, and back to loss again.  So far we are down 7.5% with the position which represents a 2% stake in the portfolio.

We are going to continue to let this story play out as we believe the wall of worry may be too high to climb with the looming fiscal cliff.  It is always a good idea to also have some protection to the downside.