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Winnebago Industries, Inc. Message Board

  • TwoBlkDogs TwoBlkDogs May 29, 2002 10:35 PM Flag

    Selling off since last week - Does any-

    one have any idea why. THO and WGO seemed to move in tandem until a couple weeks ago. Both stocks were in the low 40's in the beginning of April and now THO is near 70 and WGO is still in the low 40's. This stock was $40 in December '01, and that was before the company bought back 10% of its stock at a nice discount, before the company posted solid earnings and a positive outlook based on a > 100% increase in their backlog as of the end of their March quarter, and before anyone knew that interest rates would not be climbing in the spring but rather in the fall of this year at the earliest, and before THO crushed their earnings as verified by its earnings release last week. Anyone with any LOGICAL reason why this stock should be falling, please enlighten me.

    Thanks in advance for your thoughful reasons/responses.

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    • Here's a theory. WGO has 19 million shares outstanding, but an average 10-day volume of less than 200k shares. So being a thinly traded stock, it can be influenced more easily by short sellers and profit takers. It's had a very nice runup over the last year or so. The current short ratio IMO is a bit high at 3 with short interest at almost 5 percent of the public float. Now remember, despite that public float being nearly 20 million shares, less than 200k are traded on average each day. And there are roughly a half million shorted shares out there (all this according to WSJ data). So that in my view is a significant factor on the current price action. I don't think these shorters are hoping for a complete price collapse. I think they are looking for a price retreat back to the high 30s, and then they will probably take their profits and run. Because this stock is so thinly traded, you're not likely to see a bunch of longs go in and squeeze the shorts. So I'm waiting for this short action to play out and then I'm buying long again. I anticipated this several weeks back and sold my shares. It took a while longer than I expected, because the price still went up (I sold at about 43), but now it's losing momentum. So that's my take on the current price action. Just my opinion, I'm no expert, so it's a guess.

    • Never assume stock prices move in harmony with Company performance. It can lag or lead by years, not just months. Relax, the Company is doing well, and eventually, so will shareholder value.

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