Demand should be about the same for new products, if not more than the current products. So if they move new product lines to a drop-in facility as Fifer mentioned, then it obviously frees up capacity for the older models on current production lines, while dedicating faster output to new models for which the demand should be even higher. Eventually he said he would like to scale up the production to run several production lines in the new facility to full capacity: 300,000 sq. ft./700 employees. Nothing you can really fault in that strategy.
In the past, the have done a tremendous job increasing capacity on the existing footprint but its only now that they are out of space more or less to continue growing output as they have been. Right now the 2 mil unit backlog is just 2 quarters at their current rate.
Exactly- the algos just want volatility. The reason they take it down so hard is that there is where all the stop-hunting happens. If everyone were to stop entering stop-losses, the game would end tomorrow. Conversely, the HFTs would be happy to move it to the high $50's or if you guys were to signal an interest in buying in volume. They would love nothing more than to sell at much higher prices in bigger transactions. The trouble is, everyone who wants to own this stock long term is already in it and retail demand is tapped out.
How many of you guys are really adding right now?
That just leaves the day traders and short sellers who are borrowing their shares from institutions to try to get them back from retail (keep in mind retail investors own less than 10% of an already small float). Obviously the shorts are fine here- they arent even covering in anticipation for the divi, so the stock will keep trending here around the $48 zone until real momentum pushes it up. The trouble is with retail fully invested, the only thing that can really accomplish this would be a share buyback. Otherwise, get used to this being a long-term positions or get used to MMs Corzining you on a regular basis on no volume...
Should the trucker be paid a bonus if he can achieve faster times or less gas mileage used? See the point, profit sharing is a big part of any business. I don't see your fundamental objection to it. Even the labor at RGR gets a portion of the profits if they meet targets, just like the CEO. Profit-sharing goals are proven to work really well and motivate everyone to make the company more productive, whereas the salary-only approach gives the worker (whether CEO or janitor) no motivation to outperform, rather just phone in the hours.
You have now narrowed the scope of this discussion to one of CEO-pay fairness vs. labor, as much as I'd like to indulge you in this, I have to stop here and point out that this is hardly the place. People are here to watch their bets in the casino, if you want to discuss socio-economic problems, you'd be better off at huffpo...
Look, for me it comes down to the following: CEO talent is like a commodity. Its value is determined at the margin, not in comparison to other workers. Are most CEOs overpaid- undoubtedly. But they are nevertheless worth a certain percentage of any value they add to the company.
FIfer has done a lot for this company and COMPLETELY turned it around since 2006. I would venture to say if the old management were running things, the stock would be at $30 right now (even adjusted for natural boost form gun boom) and in a lot of debt.
So he has added a lot of value for you over time, and crucially MORE value than another CEO could have. For that he (personally) is being paid a mere 6% of profits (which were 75% higher than the year before on a 52% production increase). I personally, find this totally fair and would have voted for this as a shareholder if I wasnt a passive holder. Just my $.02 of course.
Lastly, please consider what I said- the markets these days aren't geared towards fundamental investing. That era is gone, we are in a mode of HFT domination and central planning of markets. If you care about things like corporate fundamentals and responsible boards etc. STAY OUT OF THE EQUITY MARKETS and go start a private equity firm. The markets are a giant casino nowadays, period. You might as well go complain that the casino doesnt have the gambler's best interests at hear...
You know, I sincerely hope you become very rich and successful. That way, you can look out for the rest of us and become a Carl Icahn type activist and keep the boards of America honest for the rest of us.
Me, I have to say management's compensation is near the bottom of my list of things I would want to be different about public markets. It is a brave new world where the computers are totally in charge and trend/momentum is everything, it seems like fundamentals hardly matter at all anymore as the HFTs can pull all kinds of tricks to manipulate prices to where it suits them. Combine that with the Fed rigging everything else to get the markets where they want them (20% Dow rally in 2012 anybody?), and at the moment I couldn't care less how much management is paid, as long as a stock performs. Really, it is a terrible environment to be a retail investor (you are much better off as a day trader) and I really expect you have far bigger problems than if RGR's management got paid a percentage of profits too much or not.
You have to play trend and momentum in this market whether you like it or not, so fundamentals don't really matter. Sure, in the abstract they do, but as I said, I think RGR's stock price would be here anyway (just look at the past 12 month volatility) so really who cares- at the end of the day all I want is a rising stock, and I will only get that when the MM decides its time and the stock becomes a bear trap again. Its just a big casino.
Lastly, I don't think your fears are founded regarding a sale based on some insider info. The executives merely wanted to cash in their bonus near all time highs and they, just like everyone else, know how volatile this stock is. What would you have done in their place? I sold my shares as a regular investor around $55 (and am now buying back), you can be damn sure I would have done it had it been a bonus for me of free options...
Anyway, best of luck...
You know, you make a valid point and a more eloquent argument than I thought- if your contention is that few (or none) of American public companies are run in a truly shareholder-centric way, then yes of course, I don't think anyone could really argue with that. But it really isn't a perfect system and if you don't like investing in public markets you are of course free to invest in privately run companies if you can. I think a company that is very well run (like RGR is) and also allows third parties to buy its stock while at the same time making sure the shareholders come first, always, doesnt exist.
haha, as for the latter part- I like the Dimon analogy, but it really is comparing apples to oranges. Chase's profit is often fictitious (they probably shouldn't even exist) but RGR is a manufacturer and if a manufacturing CEO can increase production 52% in one year, profits by 75% etc. etc. and not take any long term risks (debt or new facilities) then that deserves to be rewarded. This is obviously just my 2 cents, but I really have no problem paying the RGR management team 15% of 2012 profits, if I get 40% and the rest goes to Capex and employees (who also receive a piece of the pie). If I were an activist shareholder, I would have voted in favor of this payment package.
Tell you what, wouldn't you probably agree that the 11% (or 15% for the sake of argument) management received was just fine if the share price reflected fundamentals. I.e. if the stock was at $65 you wouldnt be here complaining about the managements compensation.
Really it sounds like you are only disappointed that the stock is not performing in accordance with your expectations or fundamentals and since the decline began shortly after the insider sale, that perceived causality is your only real complaint.
If you want a company that is entirely run for the benefit of the owners, you will just have to start one yourself...
PS- your last comment is totally illogical
"comparing to management at other public companies is NOT a reasonable comparison, that is just seeing who is more and less overpaid"
Of course it is a reasonable comparison! We are talking about voting with your feet, this is the market after all, so if you think RGR is disadvantageously run within the universe of public companies, then you can invest your money elsewhere. Decisions are made at the margin, that is the point.
The fact that you can't find a better performing management team in the terms outlined IS a perfectly reasonable comparison because if you could you would logically be invested there rather than with RGR, right?
If the entire universe of public companies isnt an appropriate comparison in terms of how publc companies should be run, I'd like to hear what is...
Just as a thought-experiment, lets say you were the majority owner and controlled the board- would you have paid Fifer by the way, is the 11% for management and 40% for you really not good enough? And what would you do if management theoretically threatened to quit on you if they didn't get their 8.6mil- could you honestly find another team that could do as well for less money?
well that isn't really an argument, saying "who knows what they really got paid"...
If you don't trust public sources (not just RGR, here is its profile in BW: http://investing.businessweek.com/research/stocks/people/person.asp?personId=313130&ticker=RGR)
But fine for the sake of argument, lets say management got more than the 11% of profits, let's say to humor you the true share was more like 15%. Does this seem like an unfair deal toward the shareholders? If you were at the board meeting would you honestly say this number is way too high in light of the fact that this management team has done an excellent job as we now all concede?
Dude you just said the management "steals 1/3 to 1/4" of the company. That can hardly mean you think it is run in an above-average way. And not only is that not factual, as in they awarded themselves about $4.8 million in stock when using $56 per share (less than the prior year), of the $70mil and change the company pulled in last year. Show me a company anywhere in the universe that is growing this fast in terms of production, revenues, profits AND margins. PLUS Fifer is doing all of this without taking on debt and paying management only about 11% of the profits, 40% to us shareholders and the rest to the employees and Cap/Ex.
Seriously, can you show me a management team that is doing better than that for less money?
So yeah, that does make them a little bit more than "less bad", by most standards it makes them quite favorable to shareholders.
Again, their selling of $2.2 mil of shares is not the most likely cause of the stock slide either...
What is wrong in principle with paying the management in cash and stock awards? Surely the incentive of making those shares more valuable for themselves should be obvious....
Besides, look at the big picture- management actually took a 30% pay CUT (yes, that's right) from the year before. In total compensation the management took home $12.2 mil in 2011, versus $8.6 in 2012. Fifer takes home a $500k salary and got about $4mil in stock last year. Does that really seem excessive or inimical towards shareholders when the company earned over $70mil last year (an increase of 75% over 2011).
I really don't see your argument that RGR is in anyway run as a less-friendly institution to shareholders than other public companies, if anything I think the opposite is true- I doubt most management teams would pay out a steady 40% of profits in dividends and instead would load up debt to pay those dividends. I think Fifer has clearly created a lot of long term value by turning RGR around since 2006, so don't ask for so much more...
Man get a grip- on Mar. 3rd the executives were awarded a total of 85,805 shares- hardly a significant fraction of the company. For reference at $56, those shares were worth a mere $4.8 million, not even half of one percent of the market cap at the time. That is hardly out of line with executive compensation at comparably sized public companies, especially for a team that has genuinely succeeded in adding other kinds of shareholder value (the company you own is more profitable and produces more than it did a year ago).
Moreover, they only sold 39,173 of those nearly 86k shares on the same day. Do the math, they sold less than half their awards that day- hardly a case of insider dumping. They merely collectively cashed in on about 2.2mil of their bonus.
Plus, the Directors, who werent awarded stock on Mar 3. like the officers, ALSO sold about 52,000 shares from Mar. 6- 14th. That didnt help the share price either. But they were just selling because the price was high, which should have been a lesson to you...
If you lost money holding from the earnings report until now, that is really not their fault. Just get used to the idea that this stock is easily manipulated and that unless there is a major breakout wherein the shorts are wiped out, this name will continue to be a bull trap, so be tactical about it and take profits, don't sit there holding it expecting just because you are right about the gun boom continuing that you deserve to be rewarded with soaring RGR prices, it doesnt work that way.
I think the bottom line on RGR (and SWHC) is that they are a textbook case of why you should never "love" a stock. Its not an expression of your personal convictions, its just a ticker symbol like a hundred others. If you really believe in the stock long term- great, you know it might be years before it matures into its full valuation (or is bought out) and you shouldn't even look at the price other than on earnings dates.
Other than that, unfortunately I can only think of a handful of stocks out there where the algo manipulation is light enough to hold on a medium term basis. On everything else you have to be tactical all the time. Thats the market nowadays.
I definitely concede you the first point- it certainly could have been way more shareholder-friendly. If they had gotten these options with deferred dates (perhaps 2 years) we would all have patted them on the back for a job well done. That they got them all now is a bit of a turn-off as a better time might have been right before the special dividend as the company was paying out its cash anyway.
On the second point though- that they all sold on the same day, I have to shrug my shoulders and say "what else would you expect?"
Think about it- due to the thin liquidity in this stock (which is caused by the fact that longs tend to never sell, they are merely stopped out), the insiders are as beholden to the MM volatility as everyone else.
And like I said, I think there is a fairly high chance that even if they held on to the shares voluntarily, we'd still be at $49 right now, as the stock becomes a bull trap after earnings. So knowing this, why wouldn't insiders sell while the getting was good and near all time highs?
Moreover, the 'all on the same day' thing is a non-issue to me, I mean what- would you really think it would have been better for them to hit the sell order more gradually, dumping it over the course of the next 4 weeks? It would only add selling pressure to the MM's directionless manipulation. Better it hits the tape in 1 day and to let us all know its better to get out for a while because the stock is going back to bear trap territory...
Besides- think of it from their POV, yeah they dumped the stock at $56 and as a possible result the longs were trapped for 3 months. As long as they deliver on the next earnings call, then so what- the stock will rebound and no harm, no foul (as long as you weren't foolish enough to get stopped out).
Dude all things considered management has done an excellent job with the company. Fifer has managed to increase production by 52% just in 2012. That is without taking on any debt, and not even expanding the footprint of the factories. They constantly reevaluate the layout of the production facilities and find ways to increase production, and Fifer said in the last conference call that there is still room for increases without building a new facility. R&D has been tremendous- the American Rifle went from whiteboard to retail in 12 months. 1/3 of all Cap-ex goes to R&D and new products represented 38% of 2012 sales. They now have 89 people working in R&D.
So its more than just the general "gun boom"- FIfer has totally turned the company around into a lean cash machine. When Fifer took over in 2006, net margins were close to 0%, by 2009 10% and now close to 15%.
They've done a good job and they do deserve a bonus. BUT it could have been handled in a more shareholder-friendly way, you are right, there is no denying that.
The problem is however, that there is a huge chance even if they hadnt all dumped their options on Mar. 4th that the stock would still be at this price today (look at SWHC). The share price is way, way more volatile than it ever should be and totally disconnected from fundamentals- and that is due to both the psychology of the MMs and retail investors like you. The reason this stock is so heavily shorted by the algos is that retail investors love and believe in this stock. Translation for algos: you all can be stopped out easily as long as they take it down fast and hard to stop-hunt with enough pressure to make sure some of you capitulate every bear raid. Then of course the shorts have to cover as earnings roll around as RGR maintains a healthy dividend and ALWAYS beats earnings as the few analysts that cover this stock are WAY BEARISH on it to support the MM game. Between the earnings there is hardly any news so the stock becomes a bull trap.
PS- By the way, to be totally fair to the fundamental point we should note that its interesting to look at the mREIT universe as a whole. They all sort of crashed, but some deserved it much more than others for fundamental reasons. Annaly did a very poor job going into QE3 and had to cut the divy. while IVR's crash was just a short spike and went on to all-time highs as it was the first to recover (presumably the 'story' was that having the lowest CPR, it would be the best able to withstand competition from the Fed). Given AGNC's low CPR, its chart should look much more similar to IVR than NLY, but ended up falling somewhere in between. Also I dont really think ANYONE was expecting an SPO, that would have been suicidal. If anything, Kain should have realized some of that comprehensive income and bought back AGNC shares at 10 or even 20% of the float. Can you imagine how fast the shares would have rebounded had they done that? More's the pity because I doubt management will ever get another opportunity to sell assets at north of 100 cents on the dollar and buy its own shares for 80% of BV...
I see, in that case I apologize for misinterpreting your algo-related comments the wrong way. I did get the impression that you thought it was just on those flash crash days.
Also, just to reiterate- im not in any sense advocating TA over fundamentals in anyway. You are completely correct of course to note that fundamentals always win out *over time*. Ever happen to read "expected returns" by antti ilmanen- its one of my favs.
However, I reject the contention entirely that the two waterfall plunges in AGNC were driven by fundamentals. Ill certainly give you the point about the perception of the participants etc. But dont tell me the algos werent there slamming the stock as hard and as fast as they could in those days in order to trigger as many stops as possible. Stop hunting is 90% of their bread and butter, and boy did they hit A LOT of stops on the way down to $28!
I honestly think the idea that such a fast collapse was caused by fundamental uncertainties totally fails to cover the scale of that decline. Sure you could argue fundamental uncertainties caused the collapse but I could just as easily argue the brief rally after QE3 showed confidence in management being able to use the situation to its advantage. No need to reiterate the pros/cons of QE3 for AGNC but to defend the stocks plunge along fundamental lines, your argument would basically have to be: the market just changed its mind about the fundamentals all of a sudden (4 weeks after QE3 announcement) and at the exact time the stock *coincidentally* happened to also break the 50-day MA!
Regarding algos, your statement is totally accurate: "the only people they screw are those unlucky enough to time their transactions out of sync with the bot". Precisely! Just like all those AGNC shareholders who held the stock after it exhausted its bull trend. Look, on Oct. 5th the stock was at $34.90. It broke the 50-day the next Monday and then plunged about 10% in less than 10 days.
Dont give me that BS about time horizons. Time horizons are the ultimate excuse for lack of performance every putz on bloomberg comes on and rightfully notes that on a 3-year window stocks will do just fine...
In the case of AGNC, no shareholder should have sat there and lost 10% of their capital (20% by Nov) when the signals are so obvious that a techincal plunge is coming
How do you know a major plunge is coming? Simple, when a bond fund that has been rallying with bonds fairly closely over the past 6 months, keeps rallying after QE3 even after bonds start falling hard, is a HUGE warning signal. AGNC was rallying with bonds but now rallies with high beta equities- the equivalent of having its cake and eating it too.
If youre not selling at this point, the least you should be doing is setting your stops up at the 50-day MA.
Because algos feed on stop hunting. So you know right away that a stock like this, in a WAY overextended Bull trend will get CRUSHED by stop-hunting algos on the way down.
So yes, at the end of the day you are right: one cant predict algos through geometric patterns (thats about as effective as Elliott waves!) but you CAN predict that when a "winning" stock like AGNC becomes overextended and loses momentum in a bull run, it will fall HARD as the algos pick off stops so fast that it induces a viscious cycle of panic selling fueling more stop hunting.
This isnt exclusive to AGNC, in fact it would be much faster listing stocks this hasnt happened to!
All I am saying is that by following these simple and obvious indicators- someone who is long AGNC for fundamental reasons, can get out strategically and get back in 3 months later with 20% more stock.
And how do you get the signal to get back in? Simple, as I mentioned the correlation to dead-beta stocks broke down quite clearly (see the apple chart) and flashed a clear buy signal shortly after the ex-date. I feel sorry for all those people that waited for a sub-$28 price or that thought the lows would come at the usual opex dates.
Anyway, that really is it from me- all the best to you in your future trading...
Yeah, ill second that, this threading system is a mess.
Thanks once again for your input, I was hoping maybe some other people would chime in to liven up the debate but i guess not. By the way just fyi I never once junked you.
Also i wasnt trying to psychoanalyze you in any way, its just quaint to see there are people out there who still think fundamentals (especially on the macro scale) apply in the new normal.
I dont really have any real idea what your understanding of algos is, but even someone with basic understanding of how algos work should understand that the 3 flash crashes in the stock arent really robotic abberations, so much as algos competing with one another as they do everyday. The flash crashes are only small glimmers of the markets plumbing.
Lastly as I said, following when correlations change has been very useful to me in foreseeing algo movements (which are often based on rudimentary TA) but thats voodoo to you.
Imho one should follow the market with one eye on the fact that most of it is rigges by algos and one eye on the fundamentals of great companies (those first principles you mention) which is why we are on the AGNC board to begin with.
Anyway, there doesnt seems to be a real dearth of discussion so I doubt ill be back to yahoo, therefore farewell and the best of luck to you
Oh yes, I have analyzed these articles and they are indeed incredible! I am so glad I followed this spammer's link, otherwise I would have missed this colossal improvement that this '. Biz' site had the scoop on. Funny, you'd think announcements like this would be in a press release but management made the right move in giving the exclusive to pennystock-newsletters like this one (presumably). Thanks again, I would have sold all my stock had I not just heard about this colossal improvement.
By the way, dont you guys love the fact that all the fake replies meant to endorse this spam always have a first and last name in the username...as if that made it sooo much more believable, lol...
Remember were looking at the first half of the chart until the Sept. QE announcement.
In that time bond yields are falling while AGNC is rising proportionately to the inverse bond yields (even percentage-wise), while the S&P is correlated to neither really except at times declines in tandem with yields (as one would expect in a bear market).
I cant imagine why my pointing out that AGNC had a strong inverse correlation to bonds is so hard to accept for you, even in principle. After all, it is a bond fund. Sure a more logical correlation might be the 2/10 spread but the idea that AGNC can in principle inversely track bond yields doesnt ound that far fetched. AGNC should not have any meaningful S&P correlation in the first placr.
As to the market running on perception- dismiss my AGNC/bond correlation perception all you want, and whatever little this is worth on the internet: but the breakdown of this correlation between Inverse bond yields and AGNC was a very clear and useful sell signal to me. Just like the recent breakdown of the APPL decline correlation (not at all remarkable to you, eh?) with AGNC was a buy signal for me.
I have to say it explains a lot when you see that there are people out there who have no idea how algos are really programmed to work. I can already tell by the way you said AGNC only acted robotic a few times last year, indicating you thought those particular flash crash days were the ONLY days robots mess around with this stock. What you dont seem to get is that those are only the days they go haywire, the rest of the days they are executing their algo strategies according to plan (which is why we always close so near to VWAP, which we missed by a hair today). They are ALWAYS there making the vast majority of quotes and stuffing them in whenever they want to change price quickly.
Anyway, thanks for your comments and I guess well have to agree to disagree on this one, you seem to think Im imagining things and it seems to me you're blind to whats right in front of you.