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Winnebago Breaks Down


Beating the consensus estimate wasn't enough.

I recently read an article on the plight of the recreational vehicle industry, where apparently the only folks interested in them anymore are fugitive hedge fund managers.

A few years ago I rented an RV and drove down to Alabama. It was the trip from hell. Don't get me wrong, they can be fun, but you need a lot of drivers and a lot of free time.

What struck me when I returned the vehicle was the amount of foreign customers in the rental office. I guess it comes in handy when you have four weeks of vacation, but trying to go cross country in a week for most Americans is nuts, considering work schedules and the complicated lives of our children. Americans simply don't have the time to hit the road in a manner that would make using one of those behemoths worthwhile.

Today Winnebago (WGO) beat the consensus estimate but the news was ugly, to say the least.

I have the stock as an open short idea and have been contemplating sending out an alert to cover. The thing is I'm not sure what would turn the company's fortunes around. My recreational vehicle trip wasn't nearly as fun as the movie RV with Robin Williams or as interesting as About Schmidt starting Jack Nicholas, although it had memorable moments like the time the state trooper pulled me over and told me to pick "one lane."

I almost feel guilty having a short on the stock but the reality is the stock is a lame duck. I have to say it kind of reminds me of a Woody Guthrie song, except instead of railroads, the topic is recreational vehicles. The good news, though, is that after being written off dozens of times the rails have become one of the best investments of the past decade.

Regional Banks

On the topic of turnarounds and lame ducks, those regional banks have picked up from yesterday's action.

After falling through a trapdoor, at the start of the session the regional banks are fighting back. The list of top percentage gainers are loaded up with regional banks. First California (FCAL) is the top gainer today with Huntington Bancshares (HBAN) made positive comments about a mortgage subsidiary, Bank of the Ozark (OZRK) reaffirmed guidance from a couple of weeks ago. And Fifth Third Bank (FITB) received an upgrade this morning from a well respected investment bank (no, that's not an oxymoron), BB&T Corp (BBT) said its quarterly dividend is safe and Sovereign Bancorp (SOV).

The regional bank index has taken out yesterday's high, which is important in technical analysis. As I mentioned this morning, however, the index has to take out 69.0 before I'd consider the action more than an oversold bounce.

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No positions in stocks mentioned.
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