Pistol Whipping the Market (SWHC, OLN, RGR)

Pistol Whipping the Market (SWHC, OLN, RGR)

A good many of you wrote us regarding last week’s letter, and we highlight our good reader Karl’s words now because 1) it’s very clear the man has more experience and know-how than we do, and 2) he very likely possesses more common sense.

The issue, of course, was growing your own food, and his comments can be found here, for those who care to read them, and we recommend that you do. And contrary to his claim that we’re glib regarding the prospects of growing our own, we respond contra and deny. No glibness whatsoever, friend.


To be clear, we have no doubt that soil chemistry and composition matter. Our point is simply that we don’t believe there’s either time or energy to squander at this stage. If it takes hard work, as our friend Karl suggests, so be it. We don’t have the luxury of putting it off. Get your seeds and get your experience now. And if, like Karl, you have to truck in dirt to get things happening, then you’d better find out this spring while there’s still an opportunity to experiment.

Karl writes –

“In Pennsylvania, my grandfather used to feed a family of 6 out of a 2 acre garden starting his plants from seeds in cold-frames. My grandmother would can food for winter and she also raised chickens. His son would hunt deer and the other kids would collect chestnuts and pick berries, but, they still had to buy flour, sugar, salt, and other staples. That, plus a job is how they survived the depression.”

There’s a big lesson to be learned here, and it’s found in Karl’s last sentence. Survival then depended upon a family actively cultivating and foraging for food. On top of that, a job was also necessary.

And who’s to say history won’t repeat?


Moving on…


We’re going to leave the cabbage patch for now and move on to some equally pressing issues, the first of which is self-defense.

Why? Because neat queues for a bowl of soup may have been the norm in 1932, but today we’ve a hunch something more riotous might ensue if the neighborhood standard of living declines.

Virtual Friends


Let’s be honest. The digital age is a time of almost no community. Families, too, are scattered across the nation, as everyone seeks his fortune wherever opportunity calls. And that loss of community means we live as lone wolves for the most part. Our ties with friends and co-workers are weaker and more often based on convenience than shared values. Who knows who’ll turn into a baying lupus should the tides of prosperity recede?


It’s for that reason we’ve long been fans of the small firearms makers – both as financial investments and as a means of securing one’s family, home and property. There’s nothing taboo about gun ownership. It’s the most reasonable, legal and powerful means of resisting invasion, theft or worse. Know how to use it. Secure it properly. And you have a lever of confidence that those who are unarmed will always lack.

The above chart shows the increasing interest in small arms over the last decade, though not precisely the number of new gun permits issued. For it doesn’t take into consideration checks conducted to acquire a firearm ‘carry permit’, a data point that’s risen to all-time highs of late, and which allows holders in some states to buy a weapon without passing additional NICS checks.

Blood Money


With an eye to increasing gun sales going forward, here are three companies whose stock we’ve featured in the past, and who’ve been on the move recently, too.

1. The first is Sturm Ruger (NYSE:RGR), whose shares have climbed 24% in the last five weeks (!) after a deep retreat that persisted for nearly a year. The stock has a reasonable P/E of just 10 and carries an annual dividend yield of 1.34%.

2. The second company is Olin Corp (NYSE:OLN), maker of the ever-popular Winchester small arms ammunition. OLN made a jump of the same proportions over the last month, but has a slightly superior payout, with a 3.21% dividend yield and a P/E of 16.

3. Finally, our favorite of the group, Smith and Wesson Holding Corp (NASDAQ:SWHC), whose chart we’ve reproduced below. The company pays no dividend, but has a fairly small multiple, trading at just ten times earnings.

Here’s the chart –


SWHC is up 39% in a month and is holding strong above its long term MA (blue box). An overbought RSI read (in black) confirms our expectation of some backing and filling over the near term, with a few more tests of support at $12. But after that we should see a pistol shot higher toward $15.

You’d do well to be long SWHC stock or to purchase some longer dated CALL options.

The gun buying will be ramping up shortly.

Many happy returns,

Matt McAbby, Senior Analyst, Normandy Research

2 comments on “Pistol Whipping the Market (SWHC, OLN, RGR)

  1. I owned it, and had a nice profit. Upside, (by Horizon Publishing) said to sell it, and recommended a REIT, DuPont Fabros Technology (DFT). So I sold SWHC, and bought DFT. (I was wanting more dividends, and felt relatively secure.) If SWHC drops more than you expect, and I have $ to invest, I will buy it again.

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