I’m busy, and have been for a week. So I thought I’d leave you with some light reading:

The rental vacancy rates for the nation declined from 8.4 percent in 2009 to 7.4 percent in 2011, according to one of two American Community Survey briefs covering the housing market released today by the U.S. Census Bureau. Approximately four times as many metro areas experienced declines in rental vacancy rates as those that experienced increases. The share of U.S. households that rent rather than own increased from 34.1 percent in 2009 to 35.4 percent in 2011. Nearly a quarter of the nation’s metro areas saw a rise in renting households, while less than 3.0 percent of the nation’s metro areas saw a decline.

Rental Housing Market Condition Measures: A Comparison of US Metropolitan Areas examines four characteristics of the rental housing stock using American Community Survey data collected in 2009 and 2011. The characteristics are gross rent, gross rent as a percentage of household income, rental vacancy rates, and renter share of total households and describe changes comparing 2009 with 2011.

The brief found that more renters are spending a high percentage of their household income on rent. Policymakers use gross rent as a percentage of income as a measure of housing affordability, and it is often used to determine eligibility for housing programs. In this report, renters spending 35 percent or more of household income on rent and utilities are considered to have high rental costs.

The share of renters with high housing costs in the United States rose from 42.5 percent in 2009 to 44.3 percent in 2011. However, average rental rates in the United States declined from 2009 to 2011.

“While we saw a decrease in rental vacancy rates and pricing in some areas, the burden of rental costs on households increased across many parts of the nation,” said Arthur Cresce, assistant division chief for housing characteristics at the Census Bureau. “Factors such as supply and demand for rental housing and local economic conditions play an important role in helping to explain these relationships.”

Nationwide, only 11 metro areas reduced their shares of renters with high housing costs, while 62 metro areas increased their shares.

Among the 50 most populous metro areas, some of the heaviest rental costs were borne by renters in metro areas in Florida, California and Louisiana in 2011, despite rent declines between 2009 and 2011. These include Miami with 55.7 percent of renters experiencing heavy rental costs. Orlando, Fla. (52.9 percent); Riverside, Calif. (52.2 percent); and New Orleans (51.3 percent), whose shares did not differ significantly from one another, followed closely.

Among the 50 most populous metro areas, only two became affordable for more renters — Richmond, Va., with a decline of 3.2 percentage points in the share of renters with high rental costs from 42.7 percent to 39.5 percent between 2009 and 2011, and Buffalo, N.Y., with a decline of 3.0 percentage points from 45.6 percent to 42.6.

$AEC and $CLP and the renting class are still in effect.

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I just finished up looking over CLP’s end of year materials and voting my shares. They did a fabulous job – the multifamily theme continues to have powerful undercurrents carrying the REITs to success. Occupancy is so high right now; money is flowing freely and AEC and CLP are both pushing through massive expansions in the pipelines.

I continue to see good things coming from this sector. I will be maintaining my investment in both AEC and CLP.

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Alright, I’ve reached the conclusion that I won’t have time to sit down and just carve out the entire culmination of my thoughts on BXG and what drove me to buy the name. I don’t have the uninterrupted gap of time to make that happen – and it needs to get done.

So instead we’re taking the modular construction approach here; I’m carving this thing up into pieces and I’ll let you assemble it all when I’m done.

The introduction to the name is as follows: Bluegreen is a timeshare corporation. They weren’t always timeshare, they used to be just a regular real estate company of some kind, if I’m remembering, but then in the 90’s they got into timeshare in a big way. They sort of pioneered the modern timeshare concept, taking the real estate deed/title holder model but building an exchange based travel agency on top of it, so you could go to other owner’s properties at different times of the year – before, you were restricted to the destination you purchased at the time you purchased for.

Alright, so Bluegreen got absolutely rocked in 2008/2009. But they had some management changes and the operation was cleaned up spectacularly. I’ll get into that in more intricate detail later.

Now, the company presently has limited upside of $10 a share…exactly. That’s because the chairman of BXG, an, er…interesting figure by the name of Alan Levan with possible Jeffrey Fastow-type tendencies has accepted an all cash offer to take the company private from a financial group by the name of BankAtlantic Bankcorp (BFCF), which is also chaired by, um…Alan Levan. BFCF presently owns 51% of Bluegreen stock.

The offer was originally for 8 shares of BFCF for every 1 share of BXG, but that was headed for a complete shutdown so Levan changed the offer for what is now a pure cash play.

Now, in my next piece I’ll get more detailed on the possible developments I see with the offer and the company in a minute, but I’ll leave you with this to start: at the current $10 offer, with the stock trading for ~$9.80, there’s a simple arbitrage here that nets about 2%.

In my next post, I’ll argue that that’s probably the minimal outcome and explain what I’d rather see happen.

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The walls of the room irradiate a faint heat absorbed from the hearth where a raging fire keeps back the winter tempest outside. Six stories below a fog is rising from the window panes. And the ground floor two beneath that is completely covered in a thick blanket of snow.

Going into the afternoon, I took the time to lighten up AEC. It had a great quarter, and taking advantage of the punch higher over the last six months, I took profits on everything I purchased when it undeservingly sold off last year. I’m back to holding my core position – which is about 10% of equity assets.

I now have core positions built in AEC, CLP, BAS and RGR. I have an equal sized hedge in EUO. All are equal to about 10% of assets. I have an oversized position in CCJ of almost 30%. Roughly 20% of my account is in cash.

This doesn’t count the silver I hold, which is about 15% of net value. Add that back in and all the position sizes drop a little bit; but not much.

I’m going to be very reserved about making purchases here. I’m rooting on the upside, but I’m keenly perceptive that this is the same old game being played. As prices offer me relief, I’ll just keep taking money off the table, a little at a time.

Winter has been very good to me so far. I’d be remiss to blow that.

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For all the analyst pessimism; for all the downtrodden complaints about cap rates and cash flow; for all the smirks that a company would ever bother “repaying what it owes” rather than leveraging up (more); AEC once again smashed earnings.

FFO gorged itself, plus >30%. Profits swelled. The operations of this multifamily improved considerably. And their flashy new credit rating shows off those improvements.

And through it all, occupancy held 96%.

It’s time for the REIT analysts to face the music – they were wrong. They were wrong about the company. They were wrong about the profitability of AEC being hindered by a paltry few percent in cap rates. They were wrong about an Exodus of renters leaving the market.

None of those things happened.

Or you can keep your head in the sand. I’ll just keep watching FFO build at a 30% clip, add at these ridiculous prices, and take a fat payday down the road.

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You think this makes sense do you? US markets are ramping to levels not seen since the last, great bull market. The debt of countries like Italy (where ex-president and child rapist Berlusconi is threatening to splinter the votes to ungovernable ends) and Spain (where a quarter of the youth are disaffected, unable to start their lives and about one tenth of the land mass is preparing for secession) are trading for yields that are really, reasonable. Oil is spiking towards the $100 mark – meanwhile Europe remains marred in recession and Germany just joined them. Oil stockpiles are increasing.

Precious metals are collapsing in price and the Fed is printing $80 billion a month.

In short, my dear reader, you are out of your minds.

But that is all right. You see, I foresaw your absurdity – your complete mental breakdown – months ago. I prepared for this. I realized, “this makes no sense”, and because it made no sense, I knew you would act this way. How else would the crazy behave in a crazy world?

So I did the opposite of what makes sense. And I did it first, before you.

Now, let’s chat about the euro. The $EURUSD is completely deranged. If it were a person, it would be a homeless man who found a tattered tuxedo, and is presently running around, hiding in steam vents in the middle of the street in Detroit. But, by some divine joke, this homeless man has been mistaken for a titan of industry, and is currently invited to all the high social class dinners.

“Aaaaahahghgh”, he gurgles in reply to requests for his opinion on gun control.

“EEEEAAAA”, he says when asked for advice on pre-tax 401K versus Roth.

And then he proceeds to eat his napkin with an olive fork.

Now let’s chat about oil. Oil is going way lower. The US economic numbers and forecasts are, again, way off, again. This is really not very funny anymore. How ten thousand economists can blow this year after year, never bothering to even pretend to learn from their mistakes the year prior…they should all be fired and stripped of their degrees. Pathetic…

Plus, Europe remains in a spiral. Germany, the heart of the EU, has finally entered recession this year. Question: knowing German culture, do you think that will make them more or less willing to work with their fellow member states?

Wait, don’t answer that. I’ll answer it for you. “It will make them less likely to work with their peers.”

Very good me, have a reward.

Why thank you.

German’s are going to increasingly view the rest of Europe as a useless bundle. If German wellbeing takes a hit, they’re culturally predisposed to blaming Italy or Spain or France for dragging them down with their wild schemes and self-centered demands. If Germany was reluctant to sit by and watch Draghi open the ECB doors to distressed banks before, wait until their worst prejudices are confirmed. Free money was supposed to help Europe, remember? Germany goes into recession and they’ll make sure the Bundesbank does everything within its power to hamper the rest of the EU at every turn.

Now let’s chat about housing. Housing prices are going higher, but that’s not going to help you sell that third, four bedroom house you’ve been desperately clinging to, praying for a buyer. Your retirement plans are shot, pal. Prices are going higher, but sales volumes are staying depressed. The housing recovery, like most luxuries, is reserved for the rich.

Now let’s chat about bonds. Safe haven bonds have got one major push left in them. I don’t expect the US 10 year to clear 2%. Meanwhile, bonds of Italy, Spain, Greece, etc are WAY too high. They are going to be taken out back to the woodshed before summer.

After that, I’m going to reinvestigate building a short position in American treasuries. We’re one major push in commodity prices from the Fed being strung up without any options for recourse. Because they’ve decided to load up on assets yielding 2%, they really don’t have much in the way of choices for controlling the money supply, unless they want to jack up the discount rate and watch the banks crash screaming back into bankruptcy. The economy is going to become increasingly wild, like a Stallion that got away from the Spanish.

For the moment, bet on the Fed and bet on higher prices. But always remember, in the back of your mind, that trouble cannot be vanished with the wave of a wand. Problems will always materialize in some way, and if not addressed, the consequences of those deviations can build to tremendous proportions.

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