Basswood Partners, a hedge fund sent a letter to WCI asking for representation on the board. Its owns about 5% of WCI stock.

“Since becoming a public company almost five years ago, WCI Communities has failed to capitalize on the dramatic growth and profitability expansion experienced by the public homebuilding industry. As of October 13th 2006, WCI Communities’s stock trades -16.5% below its March 2002 IPO price, while its peer group (as defined by the Company in its 2005 proxy statement) is up 88.9% over the same period. This extreme underperformance is due to management’s operating results and strategy,” Bennett Lindenbaum, principal of Basswood wrote.

“We urge WCI Communities’s board of directors to take decisive action to prevent any further loss of shareholder value and to maximize the value of the Company,” Lindenbaum continued. “WCI Communities’s stock is trading at a significant discount to its intrinsic value, especially given its large inventory of entitled land in coastal Florida purchased prior to 2000. WCI Communities and its shareholders would realize this value by selling for a premium to a larger, better capitalized and more profitable homebuilding company.”

Looks like an awful lot of negative sentiment surrounding homebuilding stocks. Whenever the market gets too bearish, it has the opposite affect on a stock. Hope this doesn’t rub off on WCI and push the stock up!!! I just sold some March out-of-the-money calls on WCI to supplement the puts I had already bought.

Just in case you’re new to options, buying a put or selling an out-of-the-money call is a bearish bet. You’re betting the stock will go down. In a put you pay a premium and you make money if the stock goes down. When you sell a call, you hope the stock doesn’t go up and you get to keep the premium you collected up front.