UA (Under Armour Inc)
UA has an incredible base product and has spent a lot of time, effort, and money to create a top notch brand image. The apparel made by UA is not easily duplicated and the brand is so sought after that the company is able to demand top dollar for its line. Retail stores like Dicks, Sports Authority, Target, etc are all clammoring for more UA products and are willing to give valuable store real estate to showcase these products.
The stock is relatively new having come to market in late 2005 and the company issued a 2ndary offering in June of 06 increasing the float to 48m shares. I made my first purchase in October buying 4,500 shares at 44.91 after the stock cleared a base on base pattern. Since then I have used options from time to time to hedge my risk and have bought and sold stock to have these calls assigned against. All of this has allowed me to reduce volatility, add to my gains, and keep my original position undisturbed for tax reasons.
The trading pattern has been a bit choppy as of late with the stock finding support at the 50 day on several occasions. The volume flow has been mostly healthy but i am a little concerned that we have not seen volume pick back up as the stock has traded up the past week. I have half my position hedged with Jan 50's which will either be assigned or expire next week. At that time I will need to make a decision whether to add back those shares, or leave it as a smaller position until the technical side clears up.
Jan 23, 2007
Heading into options expiration, I was a bit torn about whether to buy in stock that would be called away from me. Because the stock didn't trade up in strong volume after testing the 50 day the week before, I elected to let the calls be assigned taking half of my position away. That turned out to be a good decision as Barrons posted an article outlining why they thought the stock was overpriced. Monday morning the stock gapped down and sold off hard all day. Tuesday has seen the stock rebound and if it trades back up above the 50 day difinitively, I will be much more interested in adding to the position. For now, I am thankful I sidestepped some of the volatility.
Feb 2, 2007
UA reported Wednesday night and yesterday the stock sold off $3.63. The move was in strong volume but one encouraging sign is that the stock closed well above the low end of its range for the day. I think it is completely natural for the stock to sell off a bit given its high multiple and the grand expectations investors have for this name. The key will beto watch how the stock behaves in the coming days. If it is able to stabilize and halt its decline that will likely point to higher prices longer term. If, however the stock continues to slide in strong volume, I will not hesitate to turn out what is left of my position and look for other opportunities.
Feb 14, 2007
This week I became less comfortable with many of my long positions and since UA has turned into a laggard I decided to let it go in order to lower exposure and hopefully cut down on volatility until I get a clearer picture. I still booked $29,000 on the trade but that is much less than I had hoped for this strong retail name.
The stock is relatively new having come to market in late 2005 and the company issued a 2ndary offering in June of 06 increasing the float to 48m shares. I made my first purchase in October buying 4,500 shares at 44.91 after the stock cleared a base on base pattern. Since then I have used options from time to time to hedge my risk and have bought and sold stock to have these calls assigned against. All of this has allowed me to reduce volatility, add to my gains, and keep my original position undisturbed for tax reasons.
The trading pattern has been a bit choppy as of late with the stock finding support at the 50 day on several occasions. The volume flow has been mostly healthy but i am a little concerned that we have not seen volume pick back up as the stock has traded up the past week. I have half my position hedged with Jan 50's which will either be assigned or expire next week. At that time I will need to make a decision whether to add back those shares, or leave it as a smaller position until the technical side clears up.
Jan 23, 2007
Heading into options expiration, I was a bit torn about whether to buy in stock that would be called away from me. Because the stock didn't trade up in strong volume after testing the 50 day the week before, I elected to let the calls be assigned taking half of my position away. That turned out to be a good decision as Barrons posted an article outlining why they thought the stock was overpriced. Monday morning the stock gapped down and sold off hard all day. Tuesday has seen the stock rebound and if it trades back up above the 50 day difinitively, I will be much more interested in adding to the position. For now, I am thankful I sidestepped some of the volatility.
Feb 2, 2007
UA reported Wednesday night and yesterday the stock sold off $3.63. The move was in strong volume but one encouraging sign is that the stock closed well above the low end of its range for the day. I think it is completely natural for the stock to sell off a bit given its high multiple and the grand expectations investors have for this name. The key will beto watch how the stock behaves in the coming days. If it is able to stabilize and halt its decline that will likely point to higher prices longer term. If, however the stock continues to slide in strong volume, I will not hesitate to turn out what is left of my position and look for other opportunities.
Feb 14, 2007
This week I became less comfortable with many of my long positions and since UA has turned into a laggard I decided to let it go in order to lower exposure and hopefully cut down on volatility until I get a clearer picture. I still booked $29,000 on the trade but that is much less than I had hoped for this strong retail name.
3 comments:
I'm curious if you are worried about this stock b/c of it's high P/E? It is 81.63 as of the time I write this.
I am a bit actually... This was the basis of the article in Barrons that supplied some selling pressure the beginning of this week. I am content to hold a smaller size position for now while waiting to see what the company says in their upcoming report. It will be especially important to see 1) what guidance they give, and 2) how the market receives this updated guidance.
Thanks for weighing in - I appreciate the comments.
No, thank you for sharing your thoughts! It is an interesting read. I think I am going to remain in a holding pattern with UA for now. I worry about hanging on to this on Feb 1st when the conference call occurs and am considering divesting myself of it before if I have some good profits to cash in. I have no idea who kind of guidance will come down from them.
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