Don't Get Caught With Your Crocs Down 20 comments
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It think your shoes are too tight!! I love Crocs. They have come out with a new sheik wedge croc that is awesome. Get someone to resize your shoes so your toes stop hurting and making write your croc of Posted at 6:40PM on Jul 12th 2007 by debargie
Yes, they are hideous. Do not knock them until you try them.I wear my Crocs to aerobics class, sure beats my expensive athletic shoes. They do not fall off and I do not use the straps either. Posted at 7:26PM on Jul 14th 2007 by laurie
There is a clear disconnect here. Maybe it is the fact that feet are the furthest part of the body from the brain. While they are comfortable, that is not a good enough reason to buy the stock. If it was, why not load up on Levitz Furniture, they make some of the most comfortable furniture. (Wait, aren’t they out of business?)
Anyway, the fact remains that Croc’s is an interesting fad and even if the fad lasts for some time, the stock is not one for the long haul. Just look once again at the recent action when the bulls are running (maybe they are not wearing their Crocs).
If you are reading this and steam is pouring out of you, stop for a moment and ask yourself why you are so worked up about someone casting doubt on this company's ability to conquer the world.
Remember, not everyone looks at the company from the angle of foot fashion or comfort. In fact, recently (July 13th) , Baird commented on June results for independent footwear retailers and said that spring/summer reorders have been weak. The also went on to comment that weak reorders wouldn’t be ideal for Crocs or Deckers (DECK). In fairness, they also did not see a major risk for wither company, but sounded an alarm for general concern.
On a recent jaunt to Northern Europe and Russia, I was struck by just how many young people, especially in Norway, were wearing Crocs. It almost made me rethink my current thesis until something amazing happened.
On a crisp and sunny day, my wife and I took a stroll through some of the major shopping areas in Norway. We found a few shops selling Crocs. Or so it seemed. On close examination, we found that these were knock-offs. Time and time again, as we traveled we found stores selling copies.
Then I started to look down. These same youngsters wearing what I thought were all buying up those ugly sandals from Crocs, were actually wearing look-alikes. Not the real brand! So, for all those that are still “believers”, remember that fads, especially fashion, do peak and then fall hard. Don’t get caught with your CROX down!
Sure, they just signed a new agreement with MLB and there could be more of the same coming, but there is still significant froth. As a go-go growth stock, it will need to keep feeding the monster [EPS] in order to satisfy investors. If they even trip up (pun intended) slightly in the next earnings release, the downside could be substantial.
$40 is coming… Be careful…
Disclosure: Horowitz & Company portfolios are SHORT CROX. (No kidding)
CROX 1-yr chart
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2. Crocs aren't bought because of high-fashion... they are bought because of their utility.
3. You can get knock-off Crocs (though Gen Y'ers wouldn't be caught dead with knock-offs), but you can't get knockoffs with your favorite NFL team or Spidey-Crocs. This is where CROX is going to pull ahead.
Good blog. I like hearing dissent from my opinions. I think the trade is to get in CROX Aug 50 Calls @ 2.30; CROX is trading at support right now (got pegged at $45). Get your risk off the table prior to earnings and let what's remaining ride. You may see a hefty upside (like the $350 -> $6000 I got last time), or you might see nadda when CROX trades to $40.
Why is it that fads bring out the worst in people? Non the less, $40 gets you nothing? Consider the $45 put and the $40 put we recommended when Crox was at $47.50. Ummmm, up $6,000 on that trade already, not to mention the last one that netted $18,500 when it came crashing down to $41 last month. (Those were actual trades for accounts)
Now, I agree that they are hot and they are comfortable, but there is too much enthusiasm it would appear. While in the short run, I am sure there is some nice upsides and pops that will occur. I am more concerned about the longer term down. There is usually a capitulation in all growth stories and fads (especially retail) don't you think?
Cabbage Patch, Beany Babys, Tulips just to name a few. Ride it high, but be prepared to get out if things go against you. What I am saying is: don't go down with the ship, (short or long)
What worst are you talking about? I'm confused. I offered 3 observations, then I offered a trade (not investment) for playing the earning that was bullish going into earnings then "who-knows" afterwards (i.e. put some chips on the table and wait for the hype to build going into earnings -- then get out).
If you are reading a tone with my words, it is a tone you are hearing, not one that I am writing.
In response to your comment:
I did consider the 45 puts: I sold the CROX Jul 45 Puts for $2.45. I also made a little change selling the CROX Jul 50 Calls for $0.50 (in case you think I'm always bullish).
Whether Crocs are a fad will be something for history to decide. The trades are fraught with risk on either side. I think the true danger for bears is the foreign currency risk. According to their 10-Q, their suppliers are paid with USD.; with Crocs repatriating their international revenue back into USD, they're going to be coming home with more dollars than expected. International sales represented 44% of their total sales, up from 22% from the same quarter last year.
On the risk to bulls, I am roiled by the question of whether or knock-out earnings are priced in. As in, when beating earnings and raising guidance in an upmarket with a short-ratio of 6 doesn't move the stock up, there's no place to go but the direction you're projecting.
I was asking you about the WORST in this regard: It seems that when writing about CROX, many people get rather hysterical. I was not actually talking about you, I was asking you your opinion. You seemed to have a level and logical approach and that is not what one usually sees in the comment section with a stock like CROX. (I see that sentences were crunched together so understand your comment - hope this clarifies)
So, to further clarify - I think that there is an opportunity short term, though I am seeing way too much enthusiasm and too many copies of late. Both which show a near term top. I like growth stories like this, I am simply looking at the history and fundamentals of these to extrapolate. Insiders taking way too much off the table for my taste. Growth long term is questionable.
As for "This time is different" - been there done that....Hope the company does well for investors, really. Just want to have a reality check every so often
I understand what you are saying. I actually we can see hysteria on both sides. A simple look at the Y! message board for CROX, and you'll see all kinds of shorts and bulls peddling their fear and greed.
In this case, there's no doubt that the stakes are high for both the CROX bull or bear. I've been run over by earnings before, and think that get-risk-off-table-and... is my kind of strategy as volatility builds. between earnings announcements.
In your response to others, you post data that says insiders have sold a total of 1779645 post-split shares (multiplied all the numbers of your post before 6/15 by 2 and added it to the one trade post-6/15). This represents less than 25% of daily average. As a bull, I'm not terribly concerned.
As for the putative 40MM shares short submitted by another responder... I'm looking on my TD Ameriturd and E*Turd research, and I see a 28% of float (~78MM shares) short, which I compute to 20MM shares. With average volume ~5MM, I compute a short-ratio around 4, which isn't nearly what it was for the previous jump.
What after-hours brings tomorrow, I'm not sure even insiders know. But there's always a trade for making money, and if you're not in a trade, I think selling ATM calendars might just do the trick:
If I were looking to get into a trade, I'd be looking for a high-volatility/not-he... bet tomorrow, and I think that comes in the form of selling a call or put calendar either:
Buy to Open CROX Aug 50 Call
Sell to Open CROX Sep 50 Call
-or-
Buy to Open CROX Aug 50 Put
Sell to Open CROX Sep 50 Put
One thing:
I just pasted the recent trades. look at all of the trades over 6 months. I believe it adds up to over $250 million
Just tell me one thing. Seriously, just one thing: Why have the insiders sold
7/02/07 MARGOLIS MICHAEL C Sold 11,669 $43.22 504,392.53
06/15/07 CASE PETER S Sold 4,999 $45.62 228,054.38
06/12/07 CROGHAN RAYMOND D Sold 5,000 $90.83 454,150.00
06/12/07 SNYDER RONALD R Sold 150,000 $91.68 13.75 Mil
06/12/07 SNYDER RONALD R* Sold 150,000 $45.59 6.84 Mil
06/08/07 SHARP RICHARD L Sold 16,752 $85.13 1.43 Mil
06/08/07 SHARP RICHARD L Sold 52,184 $85.75 4.47 Mil
06/08/07 SHARP RICHARD L Sold 21,853 $84.20 1.84 Mil
06/06/07 MCCARVEL JOHN P Sold 25,000 $42.60 1.07 Mil
06/05/07 CROGHAN RAYMOND D Sold 5,000 $82.35 411,750.00
06/01/07 MARGOLIS MICHAEL C Sold 5,833 $82.10 478,889.31
05/31/07 MARKS MICHAEL E Sold 23,330 $81.52 1.90 Mil
05/30/07 CASE PETER S Sold 37,501 $78.67 2.95 Mil
05/22/07 CROGHAN RAYMON D D Sold 5,000 $77.48 387,400.00
05/22/07 SNYDER RONALD R Sold 125,000 $77.79 9.72 Mil
05/18/07 MARKS MICHAEL E Sold 100,000 $76.18 7.62 Mil
05/17/07 SNYDER RONALD R Sold 133,334 $76.48 10.20 Mil
05/15/07 CROGHAN RAYMOND D Sold 9,000 $72.30 650,700.00
05/15/07 SMACH THOMAS J Sold 14,202 $73.10 1.04 Mil
You were dead wrong on CROX. Not just a little bit, but all the way wrong.
Your buddies at Ant & Sons were spot on:
retail.seekingalpha.co...
You gloat about impish 18K gains on very risky put positions...
How about this:
I bought 7500 shares of CROX over the past few months - at an average of $40. I'm up $112,500. You said in your commissioned hackjob writeup on July 20 that "$40 is coming, be careful".
Your shorts have now been yanked firmly over the top of your head, quite a financial Atomic Wedgie, eh?
Brace for more agony, Andy, the margin calls roll in next week - and I hope you've shorted more.
I'm enjoying your money!
Cheers,
W.
There is something brewing, as the stock hit $52.50 today and when it plummeted it did it with large volume and with a vengeance. Ended down $3.38 on a 280 point day for the DOW. ODD...
Maybe it will be short lived, but if so, I will cover as of now, we are once again up on the shorts because we did it at a higher price than it is here. Crox is a great stock to TRADE as there is severe emotion in the air as can be seen from these posts.
I do hope you continue to make money. Really.
Are you telling me that as of the date you wrote this that you were up $112,500? The price on that day was about $58.50 and now $6 lower. So does that since then you lost $45,000? That is awful. Seriously, please tell me you had some sell stops and I will be at least a bit relieved. As I thold you sevral times, i am not looking for you to get hurt, just trying to tell it as I saw it.
If you did not, the $48 price low would mean that at one point today you were down $75,000 from your high. This is the whole point to risk management.
Maybe this is a good lesson for all of us (me included) that falling in love can lead to heartache. Hope it comes back for you. We covered all positions nicely this week.
Nope.