You are correct. Have you considered that by buying down the shares, someone will find it irresistible to buy it? SWHC, is a well run company. They have brought demand products to the field and have been taking market share from others. What other company would you rather buy, when the company you want to buy has a 9 PE and a future 8 PE, and is making big time cash.
I say that SWHC has received offers of 20+ to sell. It's not going to happen until the offer is 25+. Don't discount that possibility. When a company is far out performing the market, and is being trashed because they are only 1 of 2 publically traded companies....and a Multi-billionaire wants to crush them....don't bet against them. Bet that the Board of Directors at SWHC will accept the best deal that comes along.
You said that the short interest has been reduced. DUH, of course it has been reduced. There are less shares to trade and SWHC isn't going to make less money per share than they did yesterday!
So, everyone can take the Hamann view and SWHC is toast because gun sales are going to zero. OR..OR, you can take the view of SWHC has taken market share and because of their cheap value, make money on an SWHC acquisition. In either case, I want to see continuous reductions in outstanding shares. I believe the old farts of the company will never allow another crazy acquisition. No..Nada..never happen. SWHC is making themselves more valuable, as they have been at the direction of the old farts, (Debney saved them) and they will be sold for a nice premium. There is no crazy SWHC acquisition in the works.
I think the smarts have figured it out. Of course, if the world was full of smart people, this would be skyrocketing now. Thankfully, we live in a world of not very smart people. Otherwise, I would have not made almost 300% on the shares I sold back in March for 3.81 to pay taxes. Looks like the price is above that and about to go higher with more shares taken off of the table. That Debney is a smooth dude, and none of those old timers are going to get in his way...especially after the money that he has made them, and going to make them more.
I'm not trying to burst your bubble, as I still have 7100 shares long at 5.40. It had to go down since SWHC has taken well over 10 million shares off the table (~18%). There are less shares to short and PE will continue to rise if more shares are taken off the table with buybacks. Everyone should give SWHC its due. All of the shorts can hate them, but the numbers don't lie. While the company is a cash cow, the Board of Directors are going to vote to keep reducing the shares so they can cash out. This 75 mil is a bonus to them because they just made 10% immediately. These old farts are just looking out for themselves. They are not going to goof it up just because the company is making money hand over fist. They could care less about the company. They want to cash out. Why do you think Golden, who almost took the company into bankruptcy, hasn't sold. They are reducing the outstanding shares until someone, with the PE lower than 10, will buy them out. It's not that hard to figure out.
I'm not saying that they are going to use that 75 mil for buybacks of stock. However, I would rather that they did. Increasing share value 15% on a loan value of 5% is a smart move when your business is operating like a well oiled machine. Instant 10%. That is how you make money in todays low margin world.
You better have done some damn good due diligence if you are going to buy another business that is in trouble. SWHC has spent years getting out of the hole from past acquisitions. The plastic company acquisition was smart because it added to the bottom line immediately. I don't think that the current old guys, about to cash out, are going to vote to get "adventurous" and risk the last biggest payday of their lives.
There was 27 mil left for the last buyback. The new 75 mil was announced recently and they said could be used for new buybacks, which they will announce before they do it. They are also still making dough, so a PPS of close to normal, (albeit SWHC PE is much less than normal) should be in the works.
I seriously doubt that it's short covering, even with past PE less than 10 and future PE less than 9. The shorts always believe bad news is just around the corner and they are a patient bunch, waiting years (Hamann).
Considering that Debney usually beats by at least 10% and he forecasted earnings only 7% below last year's record numbers, many should expect a better year than last year. Add on the possibility, with the buyback AND the 75 mil, they could take out almost 15% of the outstanding shares. SWHC's current and future PE is at a level of a company who is in borderline trouble. SWHC is far from being in borderline trouble.
Regarding the SWHC CC, I had to LMAO when a rookie analyst, obviously quite lazy, asked Debney for how he knew he was gaining market share for SWHC products. Debney, always the courteous Englishman that he is, said, " We don't disclose our sources, however, we do talk to our distributor chains and they fill us in on what and whose products are selling and whose aren't." A pretty basic principle and grade school learned practice that I know one gun analyst didn't learn when he went to school. I think we all know who that analyst is (ha ha). Hamann wasn't the one who asked the question, but my immediate thought was....oh, that sounds like a junior Hamann.
You should have listened to the SWHC conference call. You would have heard that distributor inventories exceeded their 8 week comfort level on non-demand products (aka long guns). M&P products, Shields and bodyguards are short on inventory levels. Also new products to be announced in now less than 60 days are receiving very favorable reviews, which they are ramping up for with their purchase of the plastics company and assisted by the new SAP system which every Joe blow just thinks is a wasted expense.
RGR needs demand products. If they can produce, they will also exceed NICS numbers and gain market share like SWHC.
Dividends are miniscule. Dividends are what you take your wife out for an evening dinner. Reducing shares is the equivalent of cashing in to buy a new car...and if done right...a really nice car.
And if they keep doing it with their cash at a modest 2% a quarter, they can add .20 more to their FY2015 earnings per share. I like that approach.
Exactly what SWHC did today by eliminating a higher percentage of shares by waiting for the lower 14's to buy back shares. They were able to buy back over 20% more shares for their 27 million by waiting since the ER.
Yes, it was a big record. As always, SWHC and RGR are the only public gun stocks that are constantly under sniper fire by the shorts, and the liberal media. The only thing that SWHC is guilty of is consistently exceeding projections for past earnings and revenue, which put the 30% shorts all under water. SWHC has also been guilty of taking market share which ticked off the shorts and hedge funds. They are lazy in their projections and SWHC cost them a lot of money after SWHC's 3rd quarter announcement. They are a patient group, and as NICS decline, they are going to jump on anything negative.
All this does is allow more shorts to get out at a lower price, which they are doing. Yes, the decline in forecasted revenues are really small (like 5%, and profits ~7%). These are projections from the surge. I would take that any day from that kind of surge demand. Also, we don't know what other nut is going to come along in the next 3-6 months. Everyone buys protection for themselves when the law cannot protect them from these kukes. Knowing that Debney always beats by at least 10% on his forecasts, tells me that he may actually exceed last year's numbers. I think pulling it back a hair is actually a good move. They remove more shares from the pool, and expect additional announcements on more buybacks. Watch the analysts expectations for this year. They already exceed by far what SWHC just projected. You can't just invent inflated expectations after the company told you what they project, crash the stock price , and hold them to your inflated estimates, to just bomb them again later. This only can happen with public gun stocks.
Good post. SWHC had a great year, records all around. If you are long and needed to sell now you are taking a hit. If you are long and don't have to sell now, you are fine and can actually add to your portfolio.
SWHC is running like a well oiled machine. I'm not concerned with Debney's conservative outlook as he always exceeds by at least 10% in his ERs. That tells me that he probably will hit the 1.50 for 2015 anyway. I would rather take the hit now and have them keep beating on ERs than to forecast high and miss. It was the right thing to do by lowering expectations now and eliminate disappointments later. I thought the expectations for the Q1 was abnormally high to begin with and I don't think SWHC ever guided that number. It's the slowest time of the year for gun sales to begin with, anyway.
Screw the whisper. SWHC forecasted .37-.40. Analyst expectation is .39. If we allow the media to start inventing high whisper numbers and reporting misses on them to drive PPS down, we are all in a world of hurt. This stuff starts when companies consistently beat numbers on ER like SWHC. It's a last ditch move to drive it down, especially when the stock is 30% short.
No, he shoots sniper fire at Ruger, too. He is just an anti gun guy. Look at all of the analysts and he is the only sell guy since April 2012. I hope everyone noticed that he put a stop to the climb SWHC had going, even though multiple upgrades came in by other analysts. I just think he is trying to limit the shorts increasing losses. Even if SWHC has a good report tomorrow, expect Hamman to pipe up with a negative twist to it. He is just a blind squirrel.
You are absolutely right. I have been holding on since the depths of the Golden hell years. He was an idiot. The thing I look for is consistency and integrity. I think Debney runs a tight ship and is smart with managing the pipeline and most importantly manufactures what sells and introduces the right products that are in demand at the right time.
He has always been upfront with the financials and he always beats. The 2 quarters that were recorded as meets, were pre-announcements. I have no doubt that if this was going to be a miss, he would have come out and warned about that. Otherwise his beats are usually 10%. A miss...that would be uncharacteristic of him. Therefore, I think there are a few nervous shorts out there and you will see some short covering.
Now, we also have the Hamman factor out there. This guy will never admit to being wrong, as he has been for the last two years. The weak ones like Hamman are just like lawyers. They can distract and make an argument that doesn't pertain to the situation, while fooling some of the people, some of the time, that his argument is correct. I have always thought the guy is pretty pathetic, trying to deceive (I forget the ditty).
If they do .45, that Elaine from IBD didn't know what she was talking about. However, Debney usually does beat by at least 10%, so it wouldn't surprise me.
Of course, they will beat. Debney has beat guidance every quarter he has been in charge. He has beat EVERY QUARTER. The libs have cut him down to a just meet on only 2 quarters that he pre-announced a higher earnings 2 days before the announcement day and Hamman jumped the expect to that level and analyzed it to a negative. Count this...SWHC predicted .39 for the quarter. Anything less is a miss, anything more is a beat.
The reality of the announcement is that Debney is able to give his estimates after over 2 months of the period has already happened. He has already sold the last month. He already knows what he has made. He also told the idiots on the last CC, that he controls the pipeline. He can move it up and down as he sees fit. That is why I laugh at those who think there will be a miss. Ha Ha!!! To boot, he also bought the company who runs the plastics that determines his gross margins . He can now comfortably add now to the profits! Only rhetoric can stop this machine. Expect another Hamman article soon, probably, next Wednesday to offset the announcement on Thursday. I promise you...Hamman will be at it on Friday at the latest. The Bloomberg boys will be very active too, with gun buying is slowing articles. They are master baters on cue. He He