Stock advice in actual English.
Joined Sep 2, 2009
1,224 Blog Posts

Setting Myself For A RGR Disappointment

Mentally, I must ready myself to see RGR miss on earnings and crater back towards $40. Statewide background checks are way down, save for the most liberal, anti-gun cities, where terrified freedom lovers accumulate weapons at an alarming rate.

Most of the energy to buy weapons was exhausted in the first three months of the year. You can only buy so many firearms.

However, I am not prepared to sell my position, exclusively because of the minute details of my personal trading and positioning.

I already made a boat load of money in RGR, first last November when I hit a rally then sold before December. Then, I repurchased around $40. And since then I’ve been buying and selling the ranges, always profitably. I’m currently sitting on just half the position size I started with (sold north of $50 I do believe), and at least a 20% unrealized profit baked into those shares…not counting all the realized gains and dividends.

So no, it doesn’t make sense for me to sell out.

RGR’s value depends a lot on where things go from here. At latest sales, RGR is cheap – but are they maintaining those levels with background checks slowing down? At 2012 levels, the stock is a little hot, but not too bad. And if sales settle somewhere in between, I’d say we’re just fine.

But if sales start going below 2012 levels, things get interesting. I’m counting on first time gun buyers getting the itch; you never stop at just one.

Still, I’m not going to be taking any form of wash on this; I’ve come way too far. I’ll sell if it gets to $44, lock in the last smattering of shares up +10%, and walk away up big on one of the most profitable 6 month runs in a single name I’ve had since APC.

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One comment

  1. Mr. Cain Thaler
    Mr. Cain Thaler

    Very straight – Cabela’s announcing big profit, strong firearms and ammunition sales. Gun manufacturers rallying.

    Sitting tight was the right move

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