Harsh Nahar uses a fundamental approach to analyzing positions for his portfolio. He focuses on financials of the companies and their adherence to Generally Accepted Accounting Principles (GAAP) before determining whether or not he will buy. Nahar also likes to watch for irrational price drops as they can be the most opportune time to buy a fundamentally good position.
SPDR S&P Homebuilders ETF (XHB) ETFs were created to mimic the performance of a selected index, and the S&P Homebuilder’s ETF is no exception. With a portfolio meant to clone the S&P Homebuilders Select Industry Index, this fund places at least 80% of its assets into securities that are represented in the index. Over the past year the ETF has been recovering well from its decline which began in 2006. Overall, the ETF is up more than 43% over the last 12 months. Home sales were up in April as a result of the expiration of special homebuyer tax credits meant to spur activity in the housing sector, but it is possible, as home sales retreat over the next quarter, that the ETF will drop in value again.
Arcelor Mittal (NYSE:MT) Going along with the homebuilding theme, Nahar has Arcelor Mittal as one of the top holdings in his portfolio. Arcelor Mittal produces carbon and stainless steel products like pipes, structural rods, and automotive parts. MT has a good price to book and price to sales ratio compared to some competitors. Arcelor Mittal has an added benefit of being self-sufficient in obtaining many of its raw materials, which gives it an advantage over some competitors. Recently, the stock hit its lowest price in the past 12 months. While the homebuilding industry may be down at the moment, the future of the industry is still potentially great.
