Thursday, March 6, 2008

Revisiting Crocs (CROX)

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I have been going through some sold off positions from the past 3 months to see how they have been doing since I sold. I came upon Crocs (CROX) which when we last discussed [Jan 18: Closing Crocs], I was selling for a sizeable loss in the mid $30s. I looked again today, and had to avert my eyes from the carnage. It now trades at $19. Or 7x 2008 earnings. So it has lost 50% more of its value in 6 weeks - during a time the market has been essentially range bound and in fact retail has had short spurts of Kool Aid buying. This is why it is hard to assign value in bear markets... they could care less about value. Even if you believe its a gimmick, it should still grow 20-25% for a few more years, and now trades at about a 0.3 PEG ratio (P/E to Growth). Amazing. This is one the 10,000 hedge fund computers have snared - sharks who smell blood in the water. At some point it becomes a great value play but I thought that 20 points higher. I had to check the news to make sure they had not opened a subprime mortgage business or something.... doesn't appear to be the case. Children under the age of 18 should not be subject to such graphic images as the chart above..... nor should Crocs investors.

No position

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