According to data released today, demand for firearms re-accelerated in March and remains at an elevated rate. Pipeline Data believes that firearm background checks exceeded expectations in March, exhibiting exceptional seasonal strength.
The firm estimates that over 2.2 million checks were performed through the FBI's National Instant Criminal Background Check System (NICS). This represents the fourth straight month over 2 million and the fourth highest total ever.
The annual growth rate ticked up to 86%, the third highest growth rate on record -- a surprise reversal of the deceleration exhibited in February.
This latest set of data is welcome news for the firearm industry. After January's record-breaking growth rate of 171%, the February tally plummeted to 82%, leading many analysts to conclude that the recent spike in demand was reaching its end. The March data indicates otherwise for a market that is already beset with supply shortages and a backlog that extends well into the immediate future.
Last month, Smith & Wesson (SWHC) announced January-quarter earnings that topped Wall Street estimates by 13%. On its conference call with investors, CEO P. James Debney reported a doubling of its order backlog:
"Based on the strong demand for our high value product portfolio of firearms, order backlog more than doubled during the quarter. As of January 31, we had more than a year of sales reflected in backlog. And lastly, as part of our primary objective to create value for stockholders, during the quarter we purchased $20 million worth of our common stock."
Since the release of Pipeline Data's February estimates, shares of SWHC and RGR have each retreated nearly 20%. Pipeline's March report implies that investors may have been premature in their actions. Pipeline Data now estimates that the current supply shortage will persist throughout 2013 and extend into next year, which could spark a reversal in the shares of both companies.
Sentiment: Strong Buy
Only Pipeline Data I could find was going Belly Up, as in Bankrupt.
And they're giving out stock advice?
.Pipeline Data Files for Bankruptcy Protection in Delaware
By Dawn McCarty & Michael Bathon - Nov 19, 2012 5:27 PM ET ..Facebook Share LinkedIn Google +1 0 Comments
Print QUEUEQ..Pipeline Data Inc. (PPDA), a provider of payment-processing services for merchants, filed for bankruptcy protection in Delaware and plans to sell its assets.
The company listed assets of less than $10 million and debt of more than $50 million in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Ten affiliates also sought court protection.
Pipeline Data, through its subsidiaries, provides payment- processing services to small and midsize retailers that operate in physical “brick-and-mortar” stores or over the Internet, according to its website. The Alpharetta, Georgia-based company provides services to about 15,000 merchants, according to court documents.
The company was hurt by merchant closures and a lack of new clients to make up the difference and was unable to “acquire merchant portfolios and sales channels on terms that would improve its financial condition,” according to court filings.
“Pipeline has determined that a structured sale process with defined milestones under the protections of Chapter 11 would be the quickest and most efficient way” to “maximize proceeds to benefit creditors,” Brian Rosenthal, the company’s financial adviser, said in court papers.
The company said it has found a potential buyer for its assets. A phone call to Brent C. Strickland, a lawyer representing Pipeline, seeking the identity of the proposed purchaser and offer wasn’t immediately returned.
Pipeline owes lenders about $66.6 million including principal of $42.1 million. Cynergy Data LLC is listed as the company’s largest creditor without collateral backing its claims, owed $1.6 million, according to court papers.
The case is In re Pipeline Data Inc., 12-13123, U.S. Bankruptcy Court, District of Delaware (Wilmington).
You're starting to foam at the mouth.
"Mark Gomes founded Pipeline Data LLC in 2004. Pipeline Data provides investment consulting to several of America's top hedge fund and mutual fund institutions . His methodology revolves around identifying net changes, opportunities, and misconceptions in the marketplace. By utilizing proprietary metrics and an extensive network of IT industry contacts, Gomes has built an enviable reputation for discovering low risk / high reward situations.
Gomes has over 20 years of equity research experience and has held a number of key positions within leading IT research and consulting organizations. He began his career at International Data Corporation where he led its buy-side investment research practice. From 1998-2004, he served as the Director of Investment Research at AMR Research, a globally-recognized IT advisory firm (later acquired Gartner Group). There, he drove the business unit's expansion into a multi-million dollar operation, guiding clients through the Internet bubble and subsequent bust. AMR serviced over 100 Wall Street institutions during his tenure."
Where does Pipeline Data give stock advice? You are obviously shorting this stock.
NICS Background Checks
Month Checks Y/Y Change
Jan-12 920,840 17.3%
Feb-12 1,266,344 31.4%
Mar-12 1,189,152 20.0%
Apr-12 931,658 10.5%
May-12 840,412 20.6%
Jun-12 846,437 24.5%
Jul-12 853,355 25.4%
Aug-12 1,042,924 27.8%
Sep-12 1,007,259 14.7%
Oct-12 1,118,994 18.4%
Nov-12 1,525,170 38.5%
Dec-12 2,783,765 97.3%
Jan-13 2,495,400 171.0%
Feb-13 2,309,393 82.4%
Mar-13 2,208,000 85.7%
Sentiment: Strong Buy