Gundlach Wants You to Short XHB, But Why Not ITB Instead?

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Gundlach Wants You to Short XHB, But Why Not ITB Instead?
Jeff Gundlach with permission from Double-line Capital

One of the most famous conferences of hedge fund managers and market gurus is the Sohn investment Conference. This year’s edition, which is the 19th annual conference, highlighted a number of top picks from these market mavens in a variety of sectors and segments. While stocks are generally the focus, investors got a rare ETF pick this year from bond king Jeffrey Gundlach.

Gundlach, the CEO of DoubleLine Capital, a firm that has attracted more than $47 billion in assets, said that he was recommending a short play on an ETF this year, thanks to some unfavorable trends developing in the space. The segment he highlighted was housing, and in particular the SPDR Homebuilders ETF (XHB) as a potential short candidate.

jeff gundlach



Why the Bearishness on Housing? 

At the conference, Gundlach cited a lack of housing affordability as one of the top reasons for his bearish call on the space. He believes that this lack of affordability will in turn reduce housing demand and thus hit companies in the homebuilding space hard (see Homebuilder ETFs in Focus on Mixed Bag Earnings).

“Single-family housing is overrated,” said Gundlach at the conference. “Renting is more appealing across all age gr