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Chile Earthquake -- Investment Opportunity

March 01, 2010 – Comments (2) | RELATED TICKERS: ICA , CX

First --- my prayers go out to all of those afftected by the human tragedy which has struck Chile.  [more]

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Corporate Governance

October 02, 2009 – Comments (0)

Dear Fools,
 
It has taken a long series of severe mishaps to generate regulatory action aimed at improving corporate governance. In the push to reform the way publicly* owned companies are managed, it is essential to address structural issues that drive the behavior of the Board of Directors (BOD) and senior management team. *(While the companies are owned by shareholders, the executive teams treat company assets and employees as though they are personal property; they also employ compensation teams that ensure the CEO and entourage are compensated as though they are risk-taking entrepreneurs, but of course, without any of the downside risk. Hence, "performance" plans that are nothing but guaranteed excessive compensation plans)  [more]

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More SWHC Analysis

February 17, 2008 – Comments (3) | RELATED TICKERS: SWHC

After accumulating more than 1,000 shares on Friday (15 Feb), this one is in a wait and see mode until they report financial results (mid-March). SWHC share price has taken a beating lately. 52-wk high = $22.80, 52-wk low = $3.72, Current = $5+. Stock really took a hit when the company filed their form 8-K with the SEC in January and withdrew financial guidance (see link below). This announcement has the effect of magnifying perceived risk, which correlates with a lower share price. In their normal, and useless manner, analysts reacted by downgrading the stock. Kind of like staring at a pile of ashes and yelling FIRE.

At its recent fire-sale price, SWHC fit my personal investment style, which is to seek out fundamentally solid companies suffering a (hopefully) short-term hiccup.

One event I'll keep my eyes open for --- if members of the management team start buying stock in large volume. Institutional buyers have been accumulating a large quantity of shares.
See http://www.thebuylist.com/default.aspx?Stock=swhc

Key Risks
- Inventory levels are a bit high
- Cash position is low compared with prior periods
- Recently acquired Thompson/Center Arms
(Near-term business integration effort and related costs)
(They are likely to write down some of the acquired assets, a common occurrence following acquisitions)
(Question of whether it was a good acquisition at a good price is yet to be proven)
- High accounts receivable balance may indicate some pressure at the retail channels level

Key Strengths
- Smith & Wesson is a highly recognized and very powerful brand that should help the company expand out of the current economic slump
- Recently acquired Thompson/Center Arms will enable company to leverage the powerful S&W brand into long guns (rifles and shotguns)
- Management has described a sound strategy for leveraging the S&W brand
- Have had notable success selling their new line of Military and Police (M&P) weapons to state and local government police agencies
- Have moved very quickly to exploit their Thompson acquisition, releasing new products at a recent show, thus demonstrating their ability to execute on their chosen strategy

One more item: A court battle is in the works regarding gun ownership in Washington DC. The outcome of this Supreme Court decision is expected to impact SWHC, but I cannot pretend to understand exactly how. Anyone care to enlighten me?

Contradictory observations and opinions are welcomed!  [more]

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Interesting New Info Resource

February 17, 2008 – Comments (0) | RELATED TICKERS: SWHC , SAI

Was digging deeper into Smith & Wesson Holding Corporation (SWHC) prior to investing real money and bumped into this site that shows institutional buy/sell activity on individual stocks. Shows that Institutional Buy/Sell ratio for SWHC was 98/2. Another firm with a very high Buy/Sell ratio is SAI.  [more]

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Today's Rant (my post to luvb2b's blog)

August 03, 2007 – Comments (1)

As a former CPA and auditor, I have been so disgusted by the criminal behavior of America's business leaders that I began writing letters to my government representatives urging more effective regulation of capital markets.  [more]

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