Every time there is an announcement to buy back stock, insiders always sell. Why wouldn't they especially when they know the shorts eat it up and increase their positions and the weak handed longs exit. It strengthens the buyback's long term effect. I know earnings are a ways off, but I suspect this one will have a significant surprise factor associated with it...one we haven't seen in a long time.
If you are going to buy and hold hoping for a buyout as your big pay day, I do not share your enthusiasm or thought process. Any company at anytime could be bought out. When the buyout actually happens, that's when you know a buyout is in play. I am disappointed with the BOD, however we must ask ourselves "if this stock were at $20/sh, would we be equally disappointed with the BOD as we are now?" Patience is a frustrating skill to learn, but only those who truly master it catch the trophy fish. Management's guidance is always low balled...fundamentals couldn't be better. With that said, we are in good shape. I'm off to the lake for a little night fishing.
Are you familiar with the term "earnings surprise"? As per your "note", earnings surprise will likely favor longs. Combining managements consistently low forecasts with the share buyback the earnings beat will be great. The buy back will have effect on future quarters. Past quarters (memories) that you are remembering are not affected by the buy back.
Announce $100 million buyback-- sandbag with weak earnings forecast, insider selling-- Announce $15 buyback-- sandbag with insider selling--- Announce unknown buyback--- sandbag with what ever you can find....and repeat as many times as possible before earnings report. December will bring massive relief to the recent price action. Enjoy this insanely cheap buying opportunity.
I've noticed ammunition supplies improving all around, however, pricing is still too high to justify buying new firearms and going to the range on a regular basis. Pricing is never too high to stock pile ammo when supplies are low. Throwing 40, 60, 80 cents down the range on every trigger pull gets expensive quick and it does deter potential firearm buyers. Manufacturing ammunition would be an interesting avenue of expansion for SWHC and would certainly add to their bottom line. Quality control would have to be flawless.
If you account the buyback into the float, then remove the insider and tute shares, the remainder of the shares available are almost all being shorted assuming the short ratio hasn't changed much since the end of September. Failure to account for and calculate the effects of the buyback have the shorts cornered. I'm expecting some strong upward volatility in the near future. Today will just be but a taste of it.
institutions report their ownership of stock. stocks shorted would be considered a liability until covered. institutional and insider shares held are shares owned, not shorted. it's possible those same institutions are hedging their position, however the shares shorted to hedge are not included in their statements of ownership. If you compare SWHC to RGR, shorting a single share of Smith below $20 is suicide IMO.
Acadian Asset Management holds the #2 spot in top institutional holders. Prudential was #2 until Acadian reported ownership at the end of September with just over 4%. These big dogs know it's coming. Institutional ownership continues to grow and management is pulling shares off the market. I think the first week of December will be a week of reckoning. Some say Smith isn't expanding...look at the balance sheet property plant and equipment...any dum dum can clearly see they are expanding. Smith is in the process of buying back shares and as a share holder, I'd prefer the price stay low until they are satisfied with the buy backs. Ruger has 20M shares outstanding and is valued close to $70/sh. After the buybacks, Smith will have appr. 52M shares outstanding...this puts Smith's market value at about $25/sh compared to RGR. RGR does offer a dividend and Smith does not...so even if we penalize Smith's share price at 10% (even thought RGR's dividend isn't even 4%), $22.50/sh is a reasonable price target and it appears that one of the analysts following Smith was smart enough to figure this out predicting a target price in the low $20's. This won't happen over night, but if you are an investor as opposed to a day trader, pay day is on the way :)
I'm not sure what old Dat posted below (he's on ignore), but anyone who thinks a shelf registration is the same as a SPO (secondary) and swears by it, should not be given any attention. The shorts and the liberals are one in the same. They always do 2 things: Lie big and lie often...Never let a tragedy go to waste. They speak with a serpents tongue, twisting the truth to what they believe is their advantage. Yes, insiders did sell some options that they had every right to sell and they exercised a similar sale of their options exactly one year earlier. Using insider sales as an excuse to short should be reconsidered. Most long share holders want the stock to maintain close to $11 to maximize the buy back. Personally, it can stay here for another 6 months while I add more. Shorts are taking the insider's bait as well as on the fence traders. The big dogs are scarfing up shares every day. Earnings will be excellent, negative sentiment towards growth will vanish, and Scott Hammond is out of ammo (no more downgrades). BTW, I believe Hammond is the analyst predicting a one year target of $10. If you throw his low ball target out of the mix, the mean target is close to $15 before analysts rethink their position and upgrade when earnings come out. Silly rabbits.
Expansion without efficiency is a major risk. Smith is building PP&E without the introduction of another facility, by about 10 million per quarter. This could mean more efficient equipment, stacking different types of equipment to save space, or simply putting unused space to use. Do you know how many square feet of factory space is required for each model firearm made by Smith? You don't, I don't, but they do. They know all the ins and outs that can increase production capacity with the current allotment of space. Subletting some of their manufacturing processes may have opened up tens of thousands of square feet on their production floor. Management may seem greedy, but they aren't stupid. Expansion is occurring without acquiring new facilities...efficient internal expansion.
First the fundamentals get the credit for the buy back...ie book, pe, earnings and the list goes on and on. The stock is cheap now. Once all the numbers get reported by Smith, it will be even cheaper than cheap. The numbers guy will stall for a few days giving those with enough insight to acquire shares. Then they will post the updated numbers. Stock screeners will pick it up and other investors will begin jumping in. The buy back has guaranteed earnings beats whether revenues increase or not for the next year. MCap metrics aren't relevant until the fat lady sings in December.
I love lever action. They have lost popularity because they are painful to operate quickly unless your hands have been working on the ranch since you could walk. The hard stop against the back side of your fingers can be painful if you aren't an old roughneck. Building some type of cushioned stop/absorber into the action would improve popularity drastically. I highly doubt management will make any non core acquisitions again. It's old news.
If the market thinks SWHC is fairly valued, lets put the wild card into perspective. Smith will be banking between .30 and .50/sh for each of the up coming 4 quarters. Outstanding share count must be reduced for the wild card to become highly effective. It has been reduced to a more workable level, but is it enough?...management's call of course. A .25/sh/qtr divy would create a 6.6% yield at $15/sh market. Do you think the market would allow a highly profitable company to yield 6.6% for long? Heck no. A yield of 5% would put the stock price at $20. Guess what, the market won't allow it to pay out 5% for long either. If Smith is traveling down the road I see them on and pay a .25/sh/qtr dividend, the market value of SWHC should be well placed around $23/sh. If you want to put Debney on the spot during the conference call ask him "With the current under valuation of the company's stock, has there been any consideration for initiating a common stock dividend?" The dividend is going to happen, but gaging his response will give better insight towards the timing of the initiation. Those who are hoping for a buyout at $16 would be getting robbed. You have to apply the companies capability of a dividend payout even though they currently CHOOSE not to pay one, before you start to value a company for a buyout. If buybacks continue and a military contract is awarded, earnings could push the .60/sh range, and paying a .35/sh divvy would place SWHC at around $30/sh market. Company buyout vs. divvy...clear choice here people. Don't be a putz.
Couple of notes to add regarding some posts: Debney and the rest of the board would not have mentioned anything about a divvy during a buyback process. That would be insanely stupid. A direct question needs to be asked in regards to a divvy and an emotional/behavioral response must be gaged. You will not get a yes or no unless the buybacks are over. As a private company bylaws matter, as a public company shareholders matter. Look at the money they throw away to taxes. A dividend expense will drastically reduce the amount of taxes they pay to the government, simply by paying their investors. The last acquisition Smith made went very wrong. I think investors will penalize the share price if Smith makes another acquisition even if it's inline with their business model. Remember most acquisitions don't begin to pay for themselves for 3 years at best. I highly doubt that selling Smith will result in a fair value sale, based off what could be paid in dividends. IMO their is only one option left...pay a dividend.
Good point...but should it take that long to buy back 1.3 million shares? It may have happened and we just don't know, but why wouldn't it be announced as completed? With that few of shares to repurchase, I would expect it to be completed within a week of the announcement. If it has really taken over a month to repurchase 1.3 million shares, I have to ask why? Maybe they should hire someone else to handle the buy back for them. If they were to do another repurchase for $100m, how long will that take? Over a year? That's ridiculous...pay a dividend and rocket this into the $20's. With the right dividend, PE, BOOK VALUE, PEG are pretty much meaningless. On the other hand, without a divvy, those metrics are meaningless anyway based on SWHC's current under valuation.
I call .30 cents. You clearly do not understand highly conservative management practices nor do you take the time to recall the last 4 quarter guidance figures. They are always low balled hard by management. Going from .40 cents last quarter to .21 cents this quarter with a massive back log...that's almost a 50% reduction in earnings...are you high? Anyone who takes that low ball guidance to heart surely has to be on some drugs.