In this post, I’ll take a closer look at Gafisa (NYSE: GFA BP: GFASA3.SA), a Brazilian homebuilder which I mentioned in a previous post. What’s interesting about Gafisa is that the company appears almost impossible to value, and yet it still attracts significant interest, both from Brazilian and foreign investors. Though it’s a difficult task, I’ll attempt to provide a general, and yet still very simplified, framework for an evaluation of Gafisa. My basic assumption, given the growing momentum of mortgage securitization in Brazil, is that the best way for an outside investor to value the company, is perhaps to assign some value to the company’s growing receivable balance, while taking into consideration outstanding debt obligations.

A good way to play a bounce in the Brazilian stock market (down over 30% in a few months) is via real estate shares.