Kass: Method to My Madness

Here are the fundamental reasons behind my long CB Richard Ellis and short Intel and RTH trades.
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These blog posts originally appeared on RealMoney Silver on April 22.

Why I'm Long CBG

7:36 a.m. EDT

I received a number of emails regarding my long position in

CB Richard Ellis Group

(CBG)

yesterday.

Briefly, the appeal of CB Richard Ellis, which I had been short on previously (about two years ago), is that the company, with the acquisition of

Trammell Crow

coupled with its internal growth, has created the world's largest commercial real estate services business. As such, the company's global reach and critical mass serves as a potential moat in a business generally served by smaller brokerage firms.

Equally important, the credit crisis of 2006-2008 came in the nick of time and served to eliminate/reduce the type of overbuilding in the nonresidential markets that is normally accompanied at a cyclical peak. Meanwhile, many capital-rich and liquid sovereign wealth funds have targeted nonresidential real estate as an attractive market, and their purchases are not necessarily subject to financing.

Kass Katch of the Week: Short Intel

9:58 a.m. EDT

Yesterday, I initiated a short position in

Intel

(INTC) - Get Report

.

I am making this position a Kass Katch after reading Mercury Research's report (yesterday) that, for the fourth consecutive quarter, year-over-year unit growth in microprocessor shipments has far outpaced year-over-year shipments of personal computers.

First-quarter 2008 microprocessor unit shipments rose by 28% year over year, far in excess of the 12% PC growth.

I would call this a

developing inventory glut

.

Adding to RTH Short

11:57 a.m. EDT

With the price of crude oil approaching $120 per barrel, I am dramatically adding to my

Retail HOLDRs

(RTH) - Get Report

short.

Not only is the consumer spent-up (not pent-up) but cost pressures (particularly of a food and energy kind) will squeeze incomes in the months ahead, preventing a bullish V-shaped economic recovery seen by many today.

Doug Kass is the author of The Edge, a blog on RealMoney Silver that features real-time shorting opportunities on the market.

At the time of publication, Kass and/or his funds were long CB Richard Ellis Group and short Intel and Retail HOLDRs, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.