Crocs Craziness Continues: Not The Right Time To Short

Crox (CROX) has been a hot topic among investors and shorts. The consumer fashion area is far outside of our field, but we watch the shares with greedy anticipation of the day when the music stops, much as it often does with companies like this including LA Gear, Leapfrog (LF) and so on.

As we close out the summer with the last weekend of barbeques and beach weather, we note that our anecdotal experience keeps us away from shorting CROX, at least here and now. Without going into details, it’s clear that kids will pick these ugly, holey shoes against all reason. The important point though is that immediately every close friend who doesn’t have Crocs must immediately have them. Watching parent after parent put their credit card down, no matter how unenthusiastically, made it clear that the phenomenon is not yet over.

Beyond that the charm-like little plug-ins are a huge hit. Kids get one, then twenty which probably doubles the money spent on shoes themselves which wear out in about 3 months. So it is still a money machine whether anyone likes it or not.

Any success we’ve had on the short side always comes down to timing. Being short at the wrong time is just too painful for small players like us or even large ones like Julian Robertson. Our point here is it sure doesn’t feel like the right time just yet. Strange as it seems this thing probably still has legs. We don’t know the management team but if they can keep things in order, shorts will be frustrated for a while longer yet.

Just another 2c…

CROX 1-yr chart: