Thoughts on My ‘Low Drama’ Shorts — And One in Particular
I spend alot of time discussing my index trading short rentals. I do this daily and trade $SPY and $QQQ in size. Short-term market views (which form the basis for these shorts) are a popular and even controversial topic. Like butts, everyone has an opinion on the market — so the audience for an index “view” is sizeable.
And I often short overbought and popular market leaders (with very extended RSIs like $MU and $INTC) where people have strong opinions on the long and short side.
These shorts are attention catching and tend to be tough shorts — particularly in the momentum-driven market of the last decade.
But, I don’t spend enough time discussing my individual (and often “low drama”) investment shorts — companies that sell simple and understandable products (widgets) whose secular prospects and business landscape are changing for the worst. These would include multi-year investment shorts like $CHGG, $DNUT, $FIGS, $BXMT, $SNBR, $RICK, $FXLV, etc.
Case in point, my Winnebago ($WGO) short.
Check out WGO’s stock chart and the steady drop in share price. As I wrote, it is a “low drama” and successful short based on the juxtaposition of several factors:
* Pressure on the K-shaped economy moving up vertically, towards the middle and upper-middle class that, traditionally, are among the target recreational vehicle buyers.
* The steady rise in the price of oil has pressured RV sales.
* Another headwind is the large rise in the cost of the average recreational vehicle — making purchases less attainable and reducing the total addressable market.
That said, when I was driving harness horses I owned a Minnie Winnie (Winnebago) that took me all around the country for stakes races. Back then, gas was a bit more than $1/gallon and the Winnebago cost me about $30,000. Today the price of gas can be 5 to 6x that price and a motorized RV costs between $50,000 up to over $600,000!
Position: Short SPY (VS), QQQ (VS), MU (S), INTC (S), CHGG (VS), DNUT (VS), FIGS (VS), BXMT (VS), SNBR (VS) RICK (VS), FXLV (VS), WGO (S)
