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Homebuilders haven't exactly won the favor of most investors over the last few years.
Lennar(LEN - Get Report) is no exception -- the $6.2 billion builder focuses on the entry level of the housing market, building value-focused homes across the country.
That positioning is a big part of why the firm's short interest ratio sits at 7.9; right now, it would take almost two weeks of frenzied buying for short sellers to cover their bets against this stock.
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While positioning along the low end of the housing spectrum meant that Lennar went through some post-bubble pain, the firm's positioning looks good now. It's a buyer's market, and potential homeowners are looking for value -- an offering that's right up Lennar's alley. The firm's balance sheet is rife with attractive property that's ready for development, as well as finished homes that it's moving at an increasingly quick rate right now.
Like most of its peers, Lennar bit the bullet back in 2008 and 2009, getting rid of properties on its balance sheet at small profits or at losses just in order to build its cash reserves back up. Now, with around $1.4 billion in cash and investments offsetting a $4 billion building debt position, the firm is in solid enough financial shape to make it through any economic turbulence. That positioning makes the firm a good short squeeze candidate.