US gun makers on target in short sector
15 September 2014 London
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Two US listed gun makers have seen a revival in short selling activity, according to new research from Markit.
Short interest in Sturm Ruger has increased 25 percent since its last results while Smith & Wesson has also seen shorts circle as its shares fell 25 percent.
Shorts also doubled their positions in Taser after shares rallied following the recent unrest in Ferguson, Missouri.
Out of the two main listed gun makers, Sturm Ruger is the firm seeing the largest amount of short interest owing to the fact it has a greater proportion of its shares out on loan.
Markit analyst Simon Colvin stated: 鈥淭his recent high in demand to borrow comes despite the fact that [Sturm Ruger] shares are down by a third, year-to-date.鈥�
Analysts are not expecting the firm to post an increase in year-on-year sales until Q2 2015, at which point sales will have fallen 15 percent from 2013鈥檚 bumper year.
Smith & Wesson has also seen a surge in shorting activity after missing its revenue forecast. While shorts have not been as enthusiastic in borrowing the shares, cash investors have been less forgiving as the share price has fallen by a quarter. This is twice the fall seen in Sturm Ruger shares.
Colvin said: 鈥淭he combination of market saturation and Barack Obama鈥檚 inaction on gun control have contributed to Smith & Wesson having reported a 67 percent fall in demand for long guns, which gun enthusiasts had been the most eager to stock up on.鈥�
According to Colvin, another interesting development has been a surge in shoring activity in Taser shares following the 40 percent share price increase in the last month.
This price rise was driven by expectations that demand for Taser鈥檚 Evidence.com video and evidence capture service would increase the after recent unrest stemming from a spate of controversial police shootings.
Markit and others are yet to be convinced, as the forecasted revenue figure for fiscal year 2015 has stayed flat in recent weeks.
Short interest in Sturm Ruger has increased 25 percent since its last results while Smith & Wesson has also seen shorts circle as its shares fell 25 percent.
Shorts also doubled their positions in Taser after shares rallied following the recent unrest in Ferguson, Missouri.
Out of the two main listed gun makers, Sturm Ruger is the firm seeing the largest amount of short interest owing to the fact it has a greater proportion of its shares out on loan.
Markit analyst Simon Colvin stated: 鈥淭his recent high in demand to borrow comes despite the fact that [Sturm Ruger] shares are down by a third, year-to-date.鈥�
Analysts are not expecting the firm to post an increase in year-on-year sales until Q2 2015, at which point sales will have fallen 15 percent from 2013鈥檚 bumper year.
Smith & Wesson has also seen a surge in shorting activity after missing its revenue forecast. While shorts have not been as enthusiastic in borrowing the shares, cash investors have been less forgiving as the share price has fallen by a quarter. This is twice the fall seen in Sturm Ruger shares.
Colvin said: 鈥淭he combination of market saturation and Barack Obama鈥檚 inaction on gun control have contributed to Smith & Wesson having reported a 67 percent fall in demand for long guns, which gun enthusiasts had been the most eager to stock up on.鈥�
According to Colvin, another interesting development has been a surge in shoring activity in Taser shares following the 40 percent share price increase in the last month.
This price rise was driven by expectations that demand for Taser鈥檚 Evidence.com video and evidence capture service would increase the after recent unrest stemming from a spate of controversial police shootings.
Markit and others are yet to be convinced, as the forecasted revenue figure for fiscal year 2015 has stayed flat in recent weeks.
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