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Long Smith & Wesson Holding (SWHC). Top Ten Story: Guns and the Constitution: A legislator finally gets it

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February 17, 2009 – Comments (25) | RELATED TICKERS: SWHC

I am not a "gun nut". I do try shoot annually. I do not feel tougher handling a gun (well, maybe a 50 Cal or something like that) I would prefer not to have a gun in my home.

But I know my history, I feel it is a civic duty and responsibility to keep a weapon in my home, so like many good Americans I do. 

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.

FYI -  This is a Top Ten Story on digg.com with 1938 Recs and 900+ comments in less the 24 hours.

Guns and the Constitution: A legislator finally gets it

examiner.com New Hampshire Representative Daniel Itse introduced House Concurrent Resolution 6, under which New Hampshire would secede from the United States if the federal government attempts usurpation of power under five circumstances, including “Further infringements on the right to keep and bear arms including prohibitions of type or quantity of arms...

I like the stories pumping this stock:

Nice flood of positive stories on Yahoo Finance:

UPDATE - Smith & Wesson to nearly double revenue within 3-5 yrsat Reuters(Wed, Feb 4)

Four Must-See Charts of the Day: Small-Caps to Watchat TheStreet.com(Tue, Jan 27)

[video] Smith & Wesson Still Smokingat TheStreet.com(Sun, Jan 18)

[$$] Fitz Bits: Pull the Trigger on Smith & Wessonat RealMoney by TheStreet.com(Fri, Jan 16)

Consumer in the Crosshairs, but Smith & Wesson Still SmokingTheStreet.com TV(Fri, Jan 16)

[video] Consumer in the Crosshairs, but Smith & Wesson Still Smokingat TheStreet.com(Thu, Jan 15)

3 Stocks Bucking the Downtrendat Motley Fool(Mon, Jan 12)

3 Winning Stocks for a Challenging Yearat Motley Fool(Mon, Dec 22)

Smith & Wesson Misses the Bear at Motley Fool(Thu, Dec 18)

.50 Cal Desert Eagle 

Now this would be fun!

25 Comments – Post Your Own

#1) On February 17, 2009 at 7:48 PM, abitare (45.19) wrote:

Sorry, I posted this with out proof reading. I was running out of time.

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#2) On February 17, 2009 at 7:51 PM, abitare (45.19) wrote:

Bonus

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#3) On February 17, 2009 at 8:15 PM, SuperPicks (29.19) wrote:

I whole-heartedly agree on the civic duty of being armed.

I thought it was outrageous that the superior court was looking to re-intreprit the meaining of the right to bear arms over the summer. 

SWHC took a 10% hit today - ouch.  What happened in the last quarter with the big hit on earnings?  

I would definitely be bullish on guns and ammo. 

Abitare I have always respected your sector calls as your essentially top dog in score on CAPs.  And I know that you are bullish on guns & ammo.  But what are your thoughts on gold, education, and biotech sectors?  I waswondering if you could help contribute some opinion on the post I just put up. 

here's the link: 

Are we seeing Bubbles? Biotech, Gold, Education

Thanks again for continuing to post your blogs Abitare. 

 

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#4) On February 17, 2009 at 8:24 PM, abitare (45.19) wrote:

Super,

I do not have much time right now. I will try and come up with some answers tomorrow.Thank you for the reply. Report this comment
#5) On February 17, 2009 at 9:01 PM, SharpSEO (61.60) wrote:

I'm on board with the guns/ammo trade, but SWHC has too much debt for my taste. They have great revolvers, but that's about it.

I like OLN (they own Winchester) much better here. OLN's debt/assets is .15 compared to .45 for SWHC. And they're still profitable.

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#6) On February 17, 2009 at 9:01 PM, Paxtor (29.02) wrote:

Super,

I believe the last qtr hit was due to a decline in hunting rifle sales.  

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#7) On February 17, 2009 at 9:13 PM, Donnernv (< 20) wrote:

The possibility of increasing civil unrest, possibly violent, because of the progressing depression has led some to consider the necessity of owning firearms for home protection.

This reality in the country I love saddens me.  But I'd rather be prepared and not need it than need a firearm desperately and not have one.

So, for folks considering this for the first time, I have a few suggestions.  If you have only one firearm, I'd recommend a Mossberg 590 shotgun, 12 gauge, with #4 buckshot.  It's cheap, simple, and the one gun you'd be least likely to have to fire.  The sound of chambering the first pumped shell will deter almost anyone.  The sound is unique.  Pants-wetting follows.  And you can't possibly miss from 50 feet.

If you buy a second, I'd recommend a Glock 19 for 9MM rounds.  A 15 round magazine is available.  Fitted with hollow-points, it's formidable.  Your wife can easily become familiar and comfortable with it.

If you're into a third, I'd recommend a Bushmaster AR-15.  This semi-auto assault rifle holds a 30 or 40 round magazine.  Fitted with expanding hollow-points, the small .223 caliber round is appropriate for threats from 100 feet to 300 yards.  It's not an "inside the house" weapon.

And for the true gun fancier, my fourth choice is a Kimber 1911 ProCarry II, .45 caliber.  Fitted with a seven round magazine filled with .45 caliber hollow-points, you need only to come close to drop the threat.  One hit is generally a stopper.  It is a beautifully crafted semi-auto handgun.

My fondest hope is that I never have to fire any one of these at a fellow human, but if I have to, I shall.

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#8) On February 17, 2009 at 9:18 PM, SuperPicks (29.19) wrote:

Thanks Abitare!

Are there any other guns/ammo tradeable companies out there? 

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#9) On February 17, 2009 at 9:47 PM, Imperial1964 (97.49) wrote:

I'm with SharpSEO.  SWHC has too much debt.  I've been a stockholder of OLN for a while, but frankly Winchester is too small a part of the company to make any meaningful difference.

I've thought about buying RGR because I like their stats better, but I haven't done much research.  I'm not convinced that the demand in guns & ammo will be durable.  The ammo sales are mostly just bringing forward future demand, and I think a portion of the gun sales are too.  It's a get-them-while-the-gettin'-is-good kind of thing.

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#10) On February 17, 2009 at 10:04 PM, rd80 (98.60) wrote:

After you get the basics Donnernv outlines above covered, you can move on to a commuter vehicle.  Firing rate of about $3000/minute. 

SuperPicks - Alliant Tech Systems (ATK) owns Federal Ammunition, but I don't know how much of ATK's revenue is from Federal.

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#11) On February 17, 2009 at 10:07 PM, SharpSEO (61.60) wrote:

Thanks for the info Imperial. I had assumed Winchester was a larger portion of their biz. Looks like Winchester is about 30% of revenue, and a much smaller portion of income.

Still, it looks darn cheap at these levels, I haven't bought any in real portfolio yet. I don't know enough about demand for their chemical products. Gotta look into that.

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#12) On February 17, 2009 at 10:25 PM, lquadland10 (< 20) wrote:

Hey abit. I guess this is why the media cartel keeps comparing him to Lincoln. They are setting us up for us to have a civil war. Just like Lincoln. Only this time they will say we are racist because he is part black. Then they will turn it into a race war and a class war as well. We are all Americans and we will unite into one group this time I hope. IMHO.

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#13) On February 17, 2009 at 10:26 PM, camistocks (< 20) wrote:

Well, usually guns at home are not used to prevent crime. Instead, so many suicides and family dramas are being committed with guns. Because it's so easy. In an emotional situation things can get very nasty very easy and very quickly. Add in some alcohol and anything can happen...

Oh, BTW, Jesse Livermore, one of the "greatest" speculators killed himself with a gun. I wonder, if he would have lived longer, if he had no gun at his disposal...

 

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#14) On February 17, 2009 at 10:27 PM, lquadland10 (< 20) wrote:

Do you think that they will just use the unmanned drones to bomb us in our homes and forget about the guns? Just a thought.

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#15) On February 17, 2009 at 10:45 PM, SuperPicks (29.19) wrote:

Thanks rd80 - i'll look into it. and thanks to imperial for all the other info.

Iquad - unmanned attack, wow, I never thought of that...its too damn genius and evil, since sending our own against us wont work.

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#16) On February 18, 2009 at 1:05 AM, nthought (< 20) wrote:

Democrats don't want to touch gun control because it's a big loser for them.  The reality is that if this increase in firearms purchases continues, they will be foreced to address it.  Of particular concern is the situation in Mexico.  Entire towns are being taken over by drug lords, and where are they getting the guns?  You guessed it, the good ole USA.  Mexico, one of our largest and most important trading partners, could apply pressure here.  I'd be careful with these companies. 

 

Pills are a far easier form of suicide these days.  Big pharma has done an excellent job of creating street friendly drugs.  So, the gun companies have some competition.   

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#17) On February 18, 2009 at 1:08 AM, Alwaysgolong (< 20) wrote:

camistocks

Guns in the home are used to prevent crime a lot more than you are led to believe.

The only thing that will stop a bad guy with a gun, is a good guy with a gun.

Ask the lady in Colo springs who stopped a would be mass murderer shortly after his rampage began.

Oh, didn't hear about it? My point exactly. If the lady hadn't taken him out and he had been successful, it's all you would have heard about for weeks. Good guys winning is not news worthy.

The same holds true for people who protect their families and property at home.

I've got dozens of guns in my home. I've been depressed. I've been broke. I've been angry. I've had bad days. Hell, I've had bad YEARS! My guns have never attacked me, or anyone else for that matter...

Not being a smart arse. just offering my opinion.

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#18) On February 18, 2009 at 8:33 AM, Gemini846 (81.34) wrote:

Guns are really a surface issue, like a scab on the gushing wound of liberty being stripped from us every day w/out most people knowing. Only after looking back they will wonder what were we thinking.

I don't own one, but I'm not against it. If they start restricting them more, I'll be the first one to get myself a "stash".

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#19) On February 18, 2009 at 4:11 PM, abitare (45.19) wrote:

ALCON,

Thank you for the replies. A good discussion here. 

SharpSEO

Great reply. I looked at OLN, I like it too. I think the story at SWHC is an easier sell, hence all the pump stories. I do not like the debt. Basically, SWHC at a call option without an expiration.

 

Donnernv

 

Great reply. For those that want more on this google my post The Argentina Collapse. Great information on the practical nature of guns.

My fondest hope is that I never have to fire any one of these at a fellow human, but if I have to, I shall.

Amen

SuperPicks

 

SWHC, OLN, RGR, ATK

 

Imperial1964

 

Good reply. I agree. I am paying for the SWHC story.

 

rd80,

 

Good reply.

 

lquadland10

 

"Hey abit. I guess this is why the media cartel keeps comparing him to Lincoln.

 

Yeah, I do not know what the corporate media is trying to move us into. But I know they do like disaster capitalism. It is pretty amazing, but fear sells and they try to make sells. I do think people would be a lot happier with the news.

 

camistocks,

 

Good reply and I agree with what you are saying in part. For me a gun is a civic burden, not a joy to have. Some people enjoy having a gun around, to me it is just an insurance policy, an asset, a civic burden, and defense.

 

Livermore death was terrible, believed to be a "suicide". But the fact that his new wife had he had an irrevocable trust worth $1 million, and his wife reputedly removed about $3 million in cash and $1 million in jewelry from their apartment hours after he died.

Some reading about him here:

http://books.google.com/books?id=zWSVHQu2LR8C&pg=PA255&lpg=PA255&dq=jesse+livermore+wife&source=bl&ots=bN5l7RKsCv&sig=hCM_fifRpAa_pga3BqB1cICLdK4&hl=en&ei=SnicSa3XK4-ctwegjNDpBA&sa=X&oi=book_result&resnum=3&ct=result#PPA257,M1

 

nthought

 

Yep, drugs and poisons are easier.

 

 

 

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#20) On February 18, 2009 at 4:48 PM, Mary953 (64.82) wrote:

My husband taught me to shoot.  We lived in a remote area and it was a good idea to know how.  Besides, there were certain rodents, snakes, and other wildlife that I didn't want to turn the dogs out on.  My first shot was one for the books.  I grabbed the wrong gun (a rifle was a rifle, right?)  The predator literally disappeared, as did a 1"x3" trough of dirt where the head had been.  My husband removed the bit that was left from across the yard when he got home and taught me about which gun was for which purpose.

He also took the "elephant gun" and locked it away.  He said I didn't need it for anything short of bear and it had been a good year, so we didn't have to worry.

And, Donnernv, you were right some time back when you said I could probably take care of myself.  If I have a problem I can't handle, at least 1 dog (100#+) is a 'caution' dog for good reason.  But thanks - and my husband still enjoys collecting guns, so I'll keep your list in mind.

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#21) On February 18, 2009 at 6:22 PM, DemonDoug (90.12) wrote:

alwaysgolong is right - guns prevent way more crime than is ever reported, although the black market for firearms is also a big deal.  Suicide by gun in the home is very rare, usually is when you hear about murder suicide type things.  Most of the people doing murder-suicides (for example the Columbine kids) actually plan out their murders and purchase guns for that reason, they aren't previously responsible gun owners who fly off the handle.

Imagine if a responsible gun-owning female kept a derringer .22 in her purse in Virginia tech - would she have stopped the massacre there?

Also, the point of the 2nd amendment is to prevent the government from having a monopoly on weapons with which they can suppress the populace.  State militias are also supposed to exist for this purpose, and many governors have abdicated that constitutionally mandated responsibility.  The 2nd amendment was thought of for the most part because of Tories raiding homes of Colonists and basically arresting or annexing their homes, and the framers wanted to make sure this would not happen in their republic.  There are other constitutional amendments that deal with this (most notably 4th and 5th amendments, search and seizure and right to not self-incriminate).

That being said, you can be in a growth industry but not be able to make money.  There are a looooooooot of guns out there and a lot of people that are probably pawning or selling them to raise capital to keep themselves personally solvent.

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#22) On February 20, 2009 at 1:28 PM, FleaBagger (29.26) wrote:

DemonDoug - I thought you were a liberal, so what's the deal with the common sense and facts, and reasonable view of guns?

Sharp and Imperial - Last I checked Winchester Ammo was a part of OLN and Winchester Rifles was another company (that had sold their ammo division to OLN). Also, if ammo is a huge growth industry, it will have a good chance at becoming more than 30% of OLN's business, or OLN's other divisions will be growing. That's not bad. 30% is nothing to sneeze at, especially at OLN's valuation.

(I do not own OLN, but I may be buying some soon.)

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#23) On February 24, 2009 at 3:09 AM, camistocks (< 20) wrote:

abitare - thanks for a nice reading on Livermore. I really enjoyed it!

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#24) On February 28, 2009 at 6:46 PM, SharpSEO (61.60) wrote:

Damn Abitare, nice call! Up 40% or so in 10 days? Not too shabby.

SWHC chart since call

Heck of a lot better than OLN....

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#25) On February 28, 2009 at 6:52 PM, SharpSEO (61.60) wrote:

BTW, I've been looking into OLN a lot more. Their chemical biz has big exposure to homebuilding/construction. That's why they're getting crushed.

So it's probably not a great way to get exposure to guns/ammo from what I've seen. Still, it looks darn cheap here. Winchester ammo should be icing on the cake if you're gonna buy it, but not the primary reason to own it.

Also eyeing RGR, but p/e seems a bit high. Any insight on that one would be appreciated. Might buy a little SWHC if it pulls back.

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