The Down Range Forum
Member Section => Down Range Cafe => Topic started by: alfsauve on June 19, 2020, 10:54:21 AM
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As many know. S&W started buying other outdoor brands to diversify. TC, Schrade, Wheeler, Crimson Trace to mention a few. (Also Lockdown which I'm looking at for car security when traveling).
Their stock had always done really well and back 10 years a go a bought a "lot" and kept it until they changed their name. They did REALLY well stock price wise, but, and the directors were very up front about it, they never paid dividends and they never intend to. Since they were diversifying the directors decided to change the name from S&W Holding to American Outdoor Brands(AOBC).
Now they've decided to divest the S&W, the gun part of the business, from AOBC. Actually the way it's going down, they've changed their name and stock symbol from AOBC to SWBI (Smith Wesson Brands Inc). Then they'll spin the non-gun part off into a new American Outdoor brands stock symbol AOUT. Confusing, right.
How are they doing financially? If you'd bought AOBC a year ago (~$9/sh), now SWBI is now trading for >$18/sh. Most of that gain coming in the last 30 days. How will they do in the future. Anybody's guess. None of the rating services, e.g., Morning Star, rates SWBI so you're on your own.
I don't know when the cutoff date is, but hey, I'm a gambler, of sorts. I can go 100 shares and see what happens. Besides now that they've changed the corporate name back to S&W it's an investment statement.
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Ruger and S&W are the only publicly traded gun companies as far as I know.
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In the US, yes. I'm dabbling just to see what the spin off does. It's basically a free dividend (no tax consequence, I think). In straight forward accounting, the sum of the companies stock after the split should equal the value of original company the day before the split. But what usually happens in a split is that both companies stock rise above that level. However because of lawsuits pending against S&W, AOUT may rise and SWBI may fall. It's a minor gamble. Much better odds than the lottery.
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I know a 18 year old young lady who has been doing similar through high school.
The last 3 years she has not had a weekend off.
I know because she spent part of each of them fetching me coffee. ;D
She don't need no steenkeen student loans.
I ask her advice sometimes.
And she is a self informed Conservative with 2 liberal parents.
Her I respect.
Can't work up much hate for her parents either, even if they are democrats.
They did a good job.
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I have probably followed the foil hat crowd on these business acquisitions over the years with concern what it would ultimately mean for the firearm industry. What will it mean for Smith & Wesson, firearms, when the firearms are separated from everything else that they have funded? What is the reason for the Board to divide into two separate entities? Do they fear what will happen in the stone buildings in D.C.? Do they fear the Courts and anti gun law suits? Are they going PC and getting ready to dump guns?
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The acquisitions are meaningless it's been going on ever since there were business'.
Look at the history of Colt, or Remington.
They've been sold more than a hooker on pay night.
The Conglomerates are no different than FN, or DWM.
It's just good sense.
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Of course if the firearms business ever tanks the other "outdoor" enterprises will also be affected.
What I see is that by separating the firearms business then they can take legal and financial hits (bankruptcy/reorg) without affecting the other product lines. Legal and financial precaution. Also some investors my shy away from firearms companies but not "outdoor" products in general.
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Just an update. Purchased SWBI on 6/19 at $18/sh. At this moment 3 weeks later it's trading for $22.15/sh. That's a modest 23% increase in 3 weeks. Annualized that's 399%. (But remember kiddies, current performance is no indicator or guarantee of future results.)
Things could go south at any moment, especially at election time.
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Just an update. Purchased SWBI on 6/19 at $18/sh. At this moment 3 weeks later it's trading for $22.15/sh. That's a modest 23% increase in 3 weeks. Annualized that's 399%. (But remember kiddies, current performance is no indicator or guarantee of future results.)
Things could go south at any moment, especially at election time.
Sell.
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No. No. We're waiting for the American Outdoor brands to be spun off, AOUT. Then we'll see what the stock do. I'm betting on doubling my money before November.
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Sell.
Yep.
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Sell vs. Wait for spin off
This is the poker game played by speculators. The wealthiest speculators make and lose large sums playing this game, but just like buying the stock in the first place, if you don't take the risk you don't have an opportunity to gain.
Speculation is all about the strength of your gut. Alf's gut appears to be stronger than mine, but that is why my 401K is in a conservative area and returning below average.
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Sell vs. Wait for spin off
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Alf's gut appears to be stronger than mine, but that is why my 401K is in a conservative area and returning below average.
I'm only risking 100 shares, not any of the family fortune, or as Miss kKitty calls it, the family mis-fortune.
And this money is kept in a separate account, kinda like a Christmas fund account. Back in the earlier days of email and internet I had access to a news service which allowed me to get stock info as soon as it was released. I played the stock split game, buying as soon as a company announced an upcoming split, and selling soon after they split. While I made hefty returns %-wise, the amounts hardly ever exceeded four digits. So no I don't have a strong gut for this, and no I'm not rich.
Retirement accounts, 403s and IRAs, are invested aggressively. I'm taking out almost double the RMD and they're not shrinking. That'll change in the next couple of years as my life expectancy decreases and the IRS wants its due.
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So its just "play" money. 100 shares is nothing in stocks. Still it is $400 more than you had before.
I have a guy that i have used for a long time that has been between 15-20% return ever year, but he takes 20% of what he makes. I gave him 10k in 2011. The account now has just under 50k in it. I have little doubt i am his smallest account. I keep telling myself i should add a zero too it, then something comes up and the money us needed else were. Like now, my "play" money is tied up in 3 other projects. 1 is already sold out, thr 2nd and 3rd are long term projects.
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I know you're just wondering, "How's old Alfie's S&W stock doing?"
Closed at $26.715 today. I bought in at $18. That's a 48% in 2 months or 288% yearly. Wish I had put some real money into it. But I only play with the cash-on-hand. Here's the past year's chart.
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Sell.
Yeah. What Tab said.
A gain is a gain.
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Nope. Not gonna do it.
The objective was to buy in before the split and wait for it to happen. Nothing extraordinary has happened to change the plan. Stay the course.
In fact with Karmla Harris nomination things can only get better for S&W, and Ruger, between now and November.
What would be even better would be if Biden declines the nomination and either Hillary or Michelle becomes the Dem candidate. Oh that would really spike sales.
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SO HOW DID THAT WORK OUT, ALF?
Very well thank you.
The spin off was yesterday and they got all the cost basis worked out last night.
As of 1:30pm today. American Outdoors (AOUT) has gone up 20% in one day. S&W (SWBI) has increased 39% in the last 3 months.
As soon as my "play" account accumulates some cash from dividends end-of-the-month, I'll buy enough AOUT to make it an even 100 shares. And the SW I'll let ride for the time being.