Crocs (CROX) – Case Study…Supply Trumps Demand

Posted by Howard
on January 14th, 2008

I made a lot of money in Crocs last year. The shortsellers are having their way with it this year. It’s a carcass at this point. The smart shortsellers entered the trade after the stock was broken in the 40′s. The lunatics started shorting at 20, 30, 40, 50, 60 and 70 only to cover in pain and miss the payday. A few lucky shortseller top tickers caught the big move, but the next rocket will blow them up so who cares about them.

The freaking story always ends the same way. It’s why you sell on the way up in a disciplined fashion and forget about catching tops. I remember selling in the 40′s and 50′s and selling the last piece was lazy. That in hindsight looks fine.

In May, I outlined how it would end because it’s always the same .

Crocs management had some power to manage this ending in a better way They behaved the same as management at all highflying stocks, they believed their own shit. The few that might have had religion and preached a diversification strategy would be SCOFFED at Board Meetings.

Here is what they should do in rapid succession:

1. Split 8 for 1 . That will confuse and frighten short-sellers.

2. Give away Crocs at airports all over the world. $20 million worth of Crocs in a weekend bonanza. Just hand them out as people approach the X-Ray machines. Instant customers. Instant.

3. Announce a share buyback.

4. Fire their Bankers for no reason. Just say the whores wanted us to dilute you, our wonderful common shareholders in a big public display. Use a Pinata that looks like the Goldman Sachs logo as you ring the opening Bell.

Here is What will likely Happen:

1. Goldman and other Bankers will convince management to do a massive secondary offering.

2. They will use that money to help you buy a bunch of useless companies

3. You will lose focus and Crocs Underwear will be a flop. Men with amazingly sweaty balls will sue you.

Stock will roundtrip.

Can’t say when

Now we know when. It will get worse before it gets better if it gets better at all. Great product for sure but the thrill is gone.

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