Interesting Aspects to our Puts

It is a fact that motorcycle and car sales are down, but you woldn't know that to look at the stock prices of HOG and AN. Also, with consumer jewelry spending down, you would expect ZLC's stock price to be shattered and not approaching a 52 week high.

I dug deep into these stocks and I think I understand what is going on. The premise of my puts is sound, but I also chose target stocks with some challenging ownership

AN
Shares short latest reported month – Increased 1M
Shares short % of float ~40%
88% held by 15 firms
* 46% Eddie Lampert
* 6% Gates Foundation
* 30% 9 Institutions
* 6% 4 Mutual Funds

Eddie Lampert purchased 3.5M shares July 29.

There is a dual problem here: short squeeze and concentrated share ownership. The concentrated share ownership means that a drop in price really requires one of these players to walk away and dump shares. Meanwhile, with very few shares floating around, it is hard for shorts to cover positions without paying a premium

HOG
Shares short latest reported month – decreased 1M
Shares short as % float ~12%
68% held by 20 firms
* 46% 10 Institutions
* 22% 10 Mutual Funds

While not as concentrated as AN, this again explains a lot of the resistance to a falling stock price. I am counting on a bad Q3 to scare away these companies

NKE
Shares short latest reported month– increased 1.8M
Shares short as % float ~5%
35% held by 20 firms
28% 10 Institutions
7% 10 Mutual Funds

Almost no concentration that would hurt our short. I am counting on weak overall sales and a stronger dollar to erode their EPS.

VMC
Shares short latest reported month – increased 2M
Shares short as % float ~22%
63% held by 14 firms
53% 10 Institutions
10% 4 Mutual Funds

Very similar to AN and that explains the stock's strength in light of a very poor quarterly release and lowered guidance. The fundamental story is very bad - rising costs and falling revenue (not a lot of interest in building infrastructure). They have a forward P/E of ~25, which is pretty high for a firm providing construction supplies, and especially for a firm growing <10%.

ZLC
Shares short latest reported month– no change
Shares short as % float ~45%
153% held by 20 firms
109% 10 Institutions
44% 10 Mutual Funds

Short squeeze is driving this stock. Almost half of the stock is shorted.

What about our ETFC?
ETFC
Shares short latest reported month – decreased 2M
Shares short as % float ~25%
30% held by 14 firms
24% 10 Institutions
6% 4 Mutual Funds

While ETFC also faces a lot of short pressure, that pressure is lightening: down 2M shares in one month alone. A short squeeze could move the stock a little, but overall this stock is driven by fear and uncertainty in the Financial market.

After reviewing the short positions, I reach the following conclusions:
- AN, HOG, VMC & ZLC stock prices do not reflect the weak business conditions because of concentrated ownership and short squeezing
- When the stocks drop, they will plunge hard
- Still plenty of time
- NKE is the only risky investment from the standpoint of fundamentals. All other puts are dead on with respect to business conditions