In December 2016 we initiated coverage on Smith and Wesson Holding Corporation (SWHC), which has of course rebranded itself as American Outdoor Brands (NASDAQ:AOBC). The stock caught our attention after seeing the massive nosedive it has taken following the U.S elections. We believed the downturn would continue more, but that longer-term this appeared to be an amazing opportunity. The 2016 elections really moved markets. It was interesting to witness how certain sectors skyrocketed following the election, while others have tanked. And all of this is based purely on speculation. It really is a dangerous market at this point. But that is what the market is, a game of changing expectation for future performance. In many ways it is more psychological than mathematical. For my followers who may be unfamiliar, simply put, AOBC is still a gun stock, although they have been trying to diversify away from this to provide goods for outdoor enthusiasts. Before the elections, the stock had done well in the last few years with fears that the United States under a Democratic administration would continue to strip away Second Amendment rights to keep and bear arms in an effort to curb an epidemic of firearm violence. Thus, sales were high under Barack Obama given the fear individual rights to own firearms would further be infringed.
