jwaydog

Harley-Davidson in the Mire and Likely to Stay There

Wow! Just plowed through all the comments. Great job David and Punter! GS went neutral at a significantly lower price than hog currently trades.
Later,
Jwaydog

Harley-Davidson in the Mire and Likely to Stay There

David,
Great article...couldn't have written it better myself. I started getting short hog the day before 2nd quarter earnings and have been adding to this position since (even bought some $20 january 2011 puts) though so far this is not working . Please allow me a few points:
1) The story can easily be shortened to this: hog most likely isn't going to make it. Why? Jobs, jobs,jobs! I always hear people talk about doctors and lawyers who ride harleys. While it is true some do ride (actually not that many doctors would ever ride), an overwhelming majority of owners are pure blue collar. Working people love their harleys but they also love their homes and eating. Hog cannot survive in an 10% unemployment economy.
2) How Harley gained market share is beyond me. Perhaps it is a testament to the amazing brand panache or maybe the numbers are just wrong. New heavyweight metric bikes are selling with huge factory incentives. Are we to say that Harley does not compete against a very interesting lineup of their own clones. I think not. Hog faces a colossal delimma: how to discount and actually sell bikes without damaging the brand (most people are willing to pay more for a Harley because they believe value will be better retained) and further eroding the value of HDFS's portfolio.
Said it a thousand times "love the bikes, hate the company".
Later,
jwaydog
Word to the wise: just remove the gas guzzler comment. Harleys get outstanding mileage by any measure. I have owned them all.