Now as the market degraded UA's large loss yesterday got lost in the mix; as everything was down. But in fact we had a major drop first thing in the morning on "no news". Well "no news" turned out to be real news released after the bell; someone in the know was getting out and tipping off others to get out. While the small guy sits wondering... and promptly after hours we have a warning, and a stock down nearly 20% more today. You see this time after time - large put buying ahead of an earnings downfall; large call buying ahead of a buyout; a stock dipping ahead of bad news.... yet I never hear the SEC investigating this stuff. What exactly this toothless institution seems to do is beyond me. Only when it is so egregious and widespread across the entire market (like the shenanigans in early '00s) does something seem to happen. Now I will say the government has too many important things to spending money on (cough cough), so they can't spend money on simple things like financial regulation (that worked really well in our banking industry as well), so I am sure this is one of the few gov't sponsored institutions that is under staffed, but I have to say when seeing this happen year after year, for well over a decade and never seeing anyone get prosecuted for "front running" you just have to throw your arms up in the air. Just like a huge swath of call buying in the hours ahead of Countrywide Financial (CFC) buyout offer from Bank of America [Unusual Trades in Countrywide Calls Raise Eyebrows - Reuters]. Just like 1000 other examples I've seen in the past 10+ years. Yes, it's not an urban myth that the game is rigged for the big boys, like it or not.
As an aside Under Armour (UA) execs are not innocent bystanders either - last quarter they were touting their inventory build as a "good thing" (which was laughable as I pointed out), all the while unloading stock onto the masses via insider sales.
Seeing this sort of news from UA makes me quite a bit more nervous on Crocs (CROX) even with its "value" price today... as cheap as it is now, it could certainly become a lot more cheap with similar news. I probably will now be looking to reduce this position on any decent bounce, just to be safe.
- Athletic apparel and footwear company Under Armour Inc. on Thursday provided a profit forecast for the first half of 2008 well under Wall Street's expectations, as a major footwear launch will cause it to shift "substantial" marketing expenses to the first half of the year.
- Based on the timing of the Performance Training footwear launch, the company anticipates earnings per share in the first half of 2008 between 3 cents per share and 5 cents per share. The company did not break down its projection for the first and second quarters.
- Analysts had expected earnings of 25 cents a share for the first quarter and 13 cents for the second quarter, according to Reuters Estimates, though it was not immediately clear if the company's first-half forecast was comparable to those.
- However, despite the marketing shift, the company still expects 2008 net income and revenue will exceed its long-term annual growth targets of 20 to 25 percent .
2 comments:
I don't see CROX as having an inventory snafu, rather, in the last couple years the demand has exceeded supply and the retailers have demanded increased supply especially with the core products. With sales higher in summer months it makes sense to ramp up inventories ahead of time like toy manufacturers do before Christmas. I would hang on to your positions in Crocs as the global growth they experience this year, once materialized, will send this stock upward. I think UA may be a great value play once the bears back off this stock. CroxTrader
Thats what CROX said, inventory build up and I do believe them. It sounded like it was more of a distribution issue and timing more than anything but again its "better safe than sorry", not "I hate CROX" And what I believe and what the market believes are 2 different things. The market is right now doubting everything.
I also agree with your comment on UA. I expect it to be part of the portfolio either late 08 or early 09; hence why I follow it closely I owned it very briefly in the $60s but thank god I got out. Its just going through growing pains but its going to be a major player like Nike and a remarkable story. We just need to get the point that people don't think consumers will never spend another dime again.
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