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Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: tyc:> who wrote (2014)	7/23/2012 1:34:39 PM
From: tyc:>	Read Replies (1) \| Respond to of 4719

Postscript: And from a later comment: "...But that numerical figure does not express the gamble that Mr. Watsa is making on this bet. The man who has been dubbed the Warren Buffett of the north for his investment prowess is putting his reputation on the line, not only by stating publicly that he’s of the opinion the company has a good future but also by personally joining its board."

To: tyc:> who wrote (2014)	7/23/2012 2:00:25 PM
From: Sergio H	Respond to of 4719

In support of my nomination of RGR: This stock might carry some of the same stigma as a "cancer stick" stock. Sturm, Ruger & Co. is a gun and ammo manufacturer based in Connecticut. The company has been around since the 1940s and claims to be the only full line American gun maker. The stock took off when Obama was elected out of fear that this president would introduce anti-gun ownership legislation. Gun ownership in the U.S. is popular anyway. Statistics show that gun owners tend to buy more than one gun. Sales of gun and ammo tend to grow more from repeat customers than from new customers. While gun ownership percentage in American homes has decreased, the amount of guns owned by gun owners has increased dramatically. RGR stopped taking orders earlier this year because it could not keep up with an increase in demand of about 50%. They resumed production in the Spring, but the stock price took a hit because there was concern that RGR would lose business to a competitor. I think this is the reason for the size of the short position. See below. One analyst's recent opinion, to the contrary: 10:10a ET July 23, 2012 (Benzinga) Benchmark reiterated a Buy rating on Sturm, Ruger & Company (NYSE: RGR) and a price target of $60. Benchmark wrote, “Sturm, Ruger & Company is scheduled to report its Q2FY12 results on Wednesday, August 1, after the close; the call is scheduled for the following morning. We believe Ruger will report strong Q2 results, specifically on the top line. Our $111 million revenue estimate represents 40% y/y growth, supported by a 1.1 million unit backlog, which is greater than the total number of units shipped throughout the entire FY11.” Looking at this stock as a long term hold, book value is high for a "value" stock but the rest of the numbers paint a different picture. RGR's good management is displayed by its financial strength (no debt) and impressive ROA, ROE and ROI. It's net profit margin is not impressive but is high when compared to other stocks in its sector. 5 year rev. growth - 17% Gross margin - 39% Net margin - 15% Debt - 0 ROE - 35% ROA - 25% ROI - 32% P.E. - 17 Div. - 3% 5 yr. div. growth - 11% There are a number of reasons for the existence of large short positions in a particular stock. I do want to point out that there is a short position on RGR, as there is on a number of stocks nominated for our portfolio such as SPLS, INTC and Seagate. But RGR's short position would take 9 days to cover based on the avg. trading vol. and its size is about 30% of the float. That's a lot of shorting. Should be interesting to watch short term as well as long term.