Barron's writes what Fooldom Knows, the Consumer is Buying Guns and Ammo; Faber and Rogers Opine
March 01, 2009
– Comments (11) |
RELATED TICKERS: SWHC
, OLN
, RGR
A prudent man seeth the evil, and hideth himself: but the simple pass on, and suffer for it.
Proverbs 27:12
I have written on the guns and ammo craze several times. My last post: Long Smith & Wesson Holding (SWHC) on February 17, 2009. Had a good 22 RECs and 25 comments
From my post:
Anyone, who has tried to buy ammo lately, or been to a gun show knows the "consumer is not dead". I think the guns, gold, silver, and ammo story "has legs". Gold and silver are up 300% since 2001, but SWHC has fallen from $21 to $2.50. I do not think SWHC is a great company or at a good PE. But I think the story will work and there are not many publically traded gun and ammo makers left.
I guess "smart money" is following Fooldom?
The #3 read story in Barron's today:
SATURDAY, FEBRUARY 28, 2009
Breathtaking
By MICHAEL SANTOLI
Make-or-break time.THE STAY-AT-HOME HOBBYIST speculator crowd has been manically betting that societal unrest will have us all arming ourselves. The publicly traded handgun makers have had their stocks driven skyward on searing trading volumes.
Smith & Wesson Holding (SWHC) and Sturm Ruger (RGR) are the main beneficiaries, each up more than 50% in the last seven trading days, in the case of Smith & Wesson on share volume last week that ran at four to five times the daily average. These moves won the stocks' places in various momentum-screening newsletter services. And at least one major online broker was restricting purchases of Smith & Wesson based on the speculative nature of the price and volume surges, and other possible factors.
Yes, Sturm Ruger reported good earnings and increased firearms demand last week. And there has been a surge in requests for handgun background checks. This has blossomed into a breathless passed-along online story that tough times are driving people to buy lethal weapons as a precaution. Yet isn't it a bit more likely that widespread expectation of firmer gun-control laws under the new administration has simply dragged demand forward?
In any case, these non-great businesses are caught up in a mini-mania. Are those the sorts of moves a shrewd investor would rather chase, or fight?
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Let me tell you again, some people are going to get very, very wealthy and powerful in this downturn. There are going to be opportunities, as the panic continues and spreads.
I am still long RGR and SWHC. (I did sell 2/3 my SWHC at $4. I will be re-buying SWHC) I think every man, women and child will be trained in firearms before Obama leaves office. Just wait, the panic into guns will not subside, for years....
Also, I think most families will buy several guns.
Again, "gun nuts" can help me here:
22 - for hunting birds, squirrels
assualt rifles - AK-47, AR-15 for defense and big game hunting
shotgun- civil defense and hunting
revolver - simple for the wife and kids
pistol - 9mm, 45s - multiple rounds for defense, commute to work, protection at work etc...
So I think most Americans will be buying Gunssssss, not A gun. Guns-s-s-s-s
Again, do not trust me, go try and buy an AR-15 or some 5.56 or 9mm rounds. Did I mention, that unlike other industries, ammo is selling at a premium. There is NO deflation in ammo prices.
Until the government bans or restricts gun ownership, I like RGR and SWHC.
Also if/when the government does ban guns, like famous A Team Memeber and gun owner, Mr T says "I pity the Fool", who does not have one. Mr T also liked Gold, as I recall.
Fools and gun nuts, feel free to help me here.
FYI - Some of My other Gun related posts:
The New Paranoia: Hedge-Funders Are Bullish on Gold, Guns, and Inflatable Lifeboats
January 15, 2009
As if Things Weren't Bad Enough, Russian Professor Predicts End of U.S.
December 29, 2008
A More Bearish View: Legitimacy Dwindles
December 23, 2008
FYI - Related
Faber: "Buy a Farm" | Rogers: "Unrest in the United States" Marc Faber says:
The best bet for investors may be to buy a farm and escape from the cities, as a prolonged recession could lead to war, as the Great Depression did. If the global economy doesn’t recover, usually people go to war.
Jim Rogers says:
I expect to see social unrest, civil unrest in the United States a couple of years from now. Yes its changing the entire situation in the United States, the US is the largest debtor in the history of the world. There is a dramatic change taking place.
The world's century is moving from the west to the east, to Asia and many people have not figured this out yet.
Yes, you are going to see a lot of turmoil in the United States in the next 3, 4, 5 years.
Faber and Rogers join many other experts warning of crash-induced unrest.
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