"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Tuesday, November 2, 2010

How to Squeeze a Greased HOG (Anatomy of a Harley-Davidson Short Squeeze)

Step 1,  October 19, 2010
(report the earnings stench)

Q3 2010
  • retail sales of new Harley-Davidson® motorcycles decreased 7.7 percent worldwide,
  • 9.4 percent in the U.S. and 3.6 percent in international markets compared to the year-ago period.Through nine months:

  • worldwide retail sales of Harley-Davidson motorcycles decreased 9.8 percent compared to the same period last year.
  • U.S. retail sales of Harley-Davidson motorcycles decreased 13.4 percent for the first nine months of the year
  • U.S. heavyweight market segment was down 14.6 percent for the same period, compared to the year-ago period. 
  • In international markets, retail sales of new Harley-Davidson motorcycles decreased 1.9 percent compared to 2009.
  • shipped 166,013 Harley-Davidson motorcycles, an 11.3 percent decrease compared to last year's 187,085 units for the period
  • Revenue from Harley-Davidson motorcycles was $2.44 billion, a 7.0 percent decrease compared to the year-ago period
  • THANK GOD for financial services; operating income from financial services was $138.4 million, compared to an operating loss of $110.8 million in the first nine months of 2009

Step 2,  October 19, 2010
(wear lipstick on the earnings conference call)

Rod Lache – Deutsche Bank
Okay, and just very quickly, I was hoping you can comment on your outlook for raw materials at this point as you look out over the next year, just given what deals you have been doing and any thoughts on the growth initiatives in China and India, how meaningful are they now and what is the trajectory of growth there?

Keith Wandell (CEO)
As far as India and China, your question about India and China, I mean, we look at these as both very important markets for us, particularly into the future. And you know, there is a lot of work to be done there around tariffs and around manufacturing capabilities, et cetera, but certainly, when you look at our strategy, our strategy is focused on those areas and growing our sales in those areas as we go forward. India, we hope and I think four of the five dealerships that we planned have opened so far this year, and the fifth will open soon. We have been very successful in selling bikes there. I mean, we didn't have a plan to sell a large amount of bikes initially, but I think we are on plan, what we thought it would be. The interest, the affection for the brand is incredible, and we see it as a big market for us going forward.

Rod Lache – Deutsche Bank
Okay, but no volume comments at this point, is it I guess it is not material yet, it is sort of long-term strategy, is that right?

Keith Wandell

Step 3, 11/2/10
(Grease the India Press Release, make it appear that like real news)

  • moving forward with the launch of operations in India to assemble motorcycles for the Indian market from component kits supplied by its U.S. plants, 
  • Expects the CKD (complete knock-down) assembly facility to be operational in the first half of 2011.
  • Announcement comes as President Barack Obama prepares to travel to India on a state visit focused on trade and business opportunities between the two countries.
  • "This investment will allow us to improve our market responsiveness and production flexibility while reducing the tariff burden, which we expect will drive growth over time by making our bikes more accessible to India's consumers.
  • To date, Harley-Davidson India has been importing completely assembled motorcycles from the Company's U.S. final assembly plants.
  •  Once the Indian CKD assembly facility in the Indian State of Haryana is operational, Harley-Davidson India will import CKD kits for select current models
  • Indian employees at the Haryana facility will then assemble the components into finished motorcycles.
  • Other models will continue to be imported as completely built motorcycles for now.
  • Harley-Davidson India commenced operations in August 2009 and opened its first dealership in July 2010

Step 3, 11/2/10
At 2:25 pm ET, HOG up $.90 or 3+%

Yahoo Finance notes a 19.03 million share short position in Harley-Davidson as of 10/15/10 representing 9.2% of the float. The average daily trading volume for the prior 10 days is 1.983 million shares and given the short position, one can expect the manipulators to squeeze tightly until the "professionals" afford their large HOG positioned clients an orderly exit at a much more favorable price. Welcome to the U.S. Stock Market!!

Grandpa's Forecast: once the squeeze is over, and the market makers and hedge funds are now short, stock drops measurably below $30...a week, maybe 10 days...???
The manipulators will eventually get it in the end...

No comments:

Post a Comment