Ron Himelfarb

Heelys Tanks On Dilution Concerns

Jim, I think the secondary is only part of the reason the stock will fall today. I happened to be listening to the cc after the earnings release, and the stock was falling well before they announced the secondary (midway through the cc).
Important to note that the evidence that the fad is fading is in the release....lower gross margins, as well as guidance which indicates that the third quarter of this year will be flat or lower than the third quarter of last year.. If you look at their sales these last three quarters, they have been in the 65-70M range, which seems to indicate that they have lost sales momentum.

The secondary happens to coincide with the end of the six month lockup following the IPO. Clearly, the insiders recognize it is overvalued ....and want out.

Still Short Downey Financial Despite Jump on Earnings

Amit, thanks for taking the time to put together that analysis. I note that , in addition to the items you point out, that for some reason DSL reported an actual reduction in their loan loss reserves. I found that hard to believe in the current market environemnt. It struck me as an obvious and likely dishonest attempt to manage their earnings report.
I am not sure if this is available in their reports or not, but is it possible to discern what the average LTV on their negative amortization loans, and that age of those loans? With that information, and some assumptions about market performance, one could determine whether they had adequate collateral for those loans.

Why Heelys' Fifteen Minutes Are Up

worth noting as well, that 20M shares will be free from lock up in approximately 6 weeks.

I noted from a review of their 10k that their sales actually declined between the third and fourth quarter last year. In addition, the 10K indicates that their backlog was for only 53m for the first quarter, as of the end of December (they did about 71M in the fourth quarter). It appears that there are some indications that the fad may be coming to an end.