First of all, I am currently relatively heavily invested in this company, so do not accuse me of being short...
So the major reason why SWHC has been going up is because it sold off from 11-8 in December. Its always worth taking advantage when outside events trigger unwarranted sell-offs in the market. This was obviously the case in December after the Newtown Shooting, when RGR and SWHC sold off a hefty amount. That is why I bought SWHC at 8 a share. I will admit I lucked out because I sold at 9.46 and then the stock got smacked by the market and I was able to buy back in at 8.70. Now I am extremely happy with the performance...
but ASK YOURSELF: are you smarter than everyone else?
People have been buying into this stock anticipating that they will blow away earnings estimates...and by all accounts, they will. But what happens then? If you think people will funnel into this thing AFTER earnings, you are sadly mistaken. EVERYONE, I repeat, EVERYONE knows they will beat earnings (probably buy a lot). And there are major funds under scrutiny that are waiting to dump loads of this stock asoon as it pops. If this thing rockets tomorrow before earnings, consider selling into earnings or after hours during the call. Because this may very well sell off and bring us right back to 9.
My strategy: Sell tomorrow during the call. I expect the stock to continue moving up tomorrow into earnings and pop slightly after hours on the news. However, on Wedsnday I expect a sell off. Good luck if you think I'm wrong. I respect you for recognizing the fundamentals of this company. But sometimes fundamentals take a backseat to media #$%$.
You don't take money off the table when a stock goes through it's 52 week high...you buy more when it goes through and then ride it up. For a recent example, just watch Google which popped through it's 52 week yesterday (808) and continues to ride up today (827 premarket).
SWHC still not at 10.95 though getting close. I'll be back on the boards when we get there. Shouldn't be much longer. There are simply too many longs holding, shorts getting nervous, and massive earnings growth/demand (owning multiple guns is becoming a cultural phenomenon even in upper income circles...its fascinating)/NICS numbers for it to be otherwise (bar a Soros like mass naked short).
fwiw, if this thing takes out the 52 wk hi, I'm taking some off the table, and I won't be alone taking profits. Expect the funds to sell out, which will depress any serious run......for a short time. then, imo, 15-20 end of year, unless breaking news comes along and changes everything. Good luck longs; good luck to Team S&W..
mtheis17, your reasoning is sound. These are my thoughts, though: In 2008 I bought 3000 shares of Sturm Ruger around the $7 range, got hammered down, then obama got elected, Ruger went up, I took my profit and ran away at over $9. Months later I bought back 500 of those shares at $11.90, the price dropped, then recovered, I figured it was the same old same old with Ruger and I sold, breaking even. By now you see where I'm going with this. Those 3000 shares that I paid around $21,000 for, had I kept them, would now be worth nearly $180,000
Again, your reasoning is sound, but I no longer want to trade a feast for bread crumbs. I believe SWHC is now where Ruger was 5 years ago. We have four more years of obama but what is different now is that, unlike the last four years, NOW, WE KNOW obama wants to take away our gun rights, IN NO UNCERTAIN TERMS he wants to gut the 2nd Amendment. He and his cronies have made that painfully clear. Also, the landscape has changed forever, even if we recover from this recession in the next few years, we will have had YEARS AND YEARS AND YEARS of hard crime ridden living where citizens have learned that having a gun is like having a cell phone or a fire extinguisher, it's just smart to have one around in case of emergency.
More women are buying guns, people who never bought guns before are buying them, even my anti-gun liberal friends and family are buying guns. The landscape has changed. Smith and Wesson has changed, it is no longer a broken company. And once we recover from the recession? People will have more money for firearms purchases.
Anyway, you get my drift. Sure Smith may drop after the report, but I believe the long term fundamentals are there and I've sold stock, like RUGER, in hopes of buying back. Yep, bought at $7, sold at $9, and oops...
You are 100% right. Ruger did have a big pull back after having a big pop up. It i also almost back where it was after the earnings announcement. But, I remember what happened after smiths last earnings. There was a big pop up and then it pulled back. Of course Newtown added to the pull back. The question is how big will be the pop vs. the pull back. If smith copies Ruger the pullback will only last a very short time, BUT look at the options board. This makes me wonder how long will the pop up last or how much of a pull back will we see. We will know tomorrow night. Good luck to all and lets make some money.
You do realize that people are banking on a significant drop right after earnings just like RGR right? So, your point is that "so many people think it is going to skyrocket after earnings" - my point is that "so many people think that it is going to fall drastically after earnings" just like it has after the last few earnings calls and just like RGR did.
However, what happens if SWHC announce a buyback, along with a 1/2 billion in backlog? a 1/2 a BILLION. If you think this isn't possible, they had about $369M as a backlog in September. If their backlog is 1/2 a billion, then guess what? SWHC's NEXT earnings report will be a blowout as well. I'm not too sure longs and count on the massive increase in pps after the call, and I'm not so sure the shorts can bank on the sharp drop. What happens if it doesn't move?
Everyone has their opinions - just thought I would share mine.
I appreciate the insight. I have absolutely no idea what will happen, but I just think there are some people that think it will go up just because they report earnings. The days of Wall St. caring about just earnings are over and its all about guidance now. A company could miss by a mile but give very positive guidance and shoot up these days. SWHC will blow out earnings and if your backlog number ends up being accurate it might shoot up after the call. I personally will not both to play it, I've made about 40% so far (due to the fact that I was able to trade in and out almost perfectly), and Ill take my profit and wait for it to settle down before I start to think about jumping back in.
The flaw in your reasoning is the fact that SWHC was only, up until 2 years ago being run by an invalid CEO named Golden who came onto the scene and bought everything he thought would grow the company. The last 4 years before Debney has been taking writedowns and business losses. It was pathetic.
Nobody seems to remember why SWHC went from 20+ to 2 PPS. It has taken only less than 2 years for Debney to not only turn this around, but state up front...we will focus on selling guns. We will maximize gun selling and buy back shares. For those of you who do not believe this, go back to past ER's when he has been in control. I have a 100% belief in his strategy and am comfortable with my 10K shares that I have been holding since I bought them 4 years ago at 5.60, watched it go to 2, and now about to get the big pay day.
I probably am more in the know because I spent quite a bit to invest in this long ago. Anyone who thinks that SWHC is going to post small revenue or small earnings beats will pay for selling ahead of earnings.
I got into SWHC late because of their previous mgt and performance, have been in RGR since Nov 2009 at $10.77, March 2010 at $12.61, and continued to buy all the way up. Much more invested in RGR (6x) than SWHC at this point, also in CAB (2x). Sold a litttle RGR late last year because of the pending tax increase on cap gains only to have it not happen and then bought back in at a higher price. I am heavily weighted with a gun portfolio.....perhaps way more than I should be.....but don't see a better group to be in at this time.
I think yesterday's mid-day drop back in price.....which occurred with a lot of volume....was most likely the pension funds selling....and then RGR and SWHC went right back up. I think we may see more of that today or after ER.....but hold on until those funds have sold out and then we'll continue the upward climb.
Sentiment: Strong Buy
I am a similar investor. Got in a bit later (fortunately), but always thought that this is an iconic company which needed to quit buying stupid add-ons. I trust this CEO, he is even shutting down Walther, a tough decision. My gun shop owner says the new line at S&W is really good, and he was always pushing Glocks.
can't help but think your post has merit. Wall Street NEVER makes it this easy for the little guy to make a buck. FOR THE LONG TERM 1-2 years, yes, there can't help but be a upward trend with some decent dips. But someone sold a block of 40k+ shares at the close today. Does he know something we don't??? maybe, maybe not. But this has rallied into earnings and the old cliche, buy the rumor, sell the news has been around for a long time and for a reason. As I posted earlier today I have core shares and trading shares. Sold the trading shares to early this morning but got back in. Those shares will not get caught in a market maker short raid...and we have seen that happen before. Still believe that somehow, sometime this company is privitized or bought out.
Yes. I think it should somewhat mimic Ruger. However, I think SWHC is undervalued compared to RGR. SWHC has much better valuation indicators.
Another thing worth noticing is the previous buy backs the company has made. RGR issued a dividend at its earnings report.
SWHC has little debt and has been selling a ridiculous amount of inventory. As a result the company is probably experiencing increased cash on hand.
It may be my optimism but a buy back doesn't seem real far fetched.