Great discussion regarding the recent volume pickup in DHB, and I agree with all the points that everyone made. There's no doubt that over the last year or two -- with some stammering and stuttering and halting and faltering along the way -- DHB has vindicated itself, executed its business strategy admirably, and emerged as the force to be reckoned with in an industry where demand for its products will continue to be very strong for the foreseeable future. Become a Complete Fool
I would suggest three additional reasons for the recent increase in DHB's trading volume and accelerating share price:
1. The election is finally over, thank goodness. Wall Street hates indecision more than anything else (except, perhaps Alan Greenspan), and the same nervous sentiment that locked the markets into a holding pattern for the past year prior to the election kept DHB languishing in a narrow trading range.
And the outcome of the election was the icing on the cake for investors. President Bush won, ensuring another four years of an investor-friendly tax policy that encourages corporate growth and widespread participation in the equity markets. The best news, of course, is that we will not have to relive the election debacle of 2000, which many people feared as polling day approached. Bush's win can't be described as a "landslide," but the margin was quite impressive -- sufficient to compel Whatshisname to concede and save us all the heartburn of waiting almost until Christmas for the Supremes to once again decide who gets to be President.
With that huge overhanging imponderable factor finally decided, the markets rallied nicely on the good news, including DHB.
2. DHB has faced an uphill battle selling the company to investors and, quite frankly, their marketing acumen on Wall Street has been -- and continues to be -- pretty dismal. It doesn't produce a sexy product. I seriously doubt if we'll ever see body armor commercials on TV competing for ad time with Viagra, the Ionic Breeze, or even the Craftmatic Adjustable Bed.
Wall Street also loves personality when it comes to embracing a company. To their detriment in a rather narrow-minded Wall Street investment community, David Brooks darned sure ain't Larry Ellison, Michael Dell or Steve Jobs. And Sandra Hatfield, sincere and dedicated as she is, ain't Carly Fiorina or Meg Whitman. There's nothing slick or polished in Wall Street's perception about the people who run this company. Their conference calls sound like an episode of The Beverly Hillbillies and often fall quite a bit short of impressing "suits" on Wall Street.
However, investors are strictly motivated by greed, and they never argue with success. The management at DHB has convincingly demonstrated to Wall Street that you don't have to wear a Brooks Brothers suit (no relation to David) or talk like Jeff Bezos to produce the best body armor in the world. With millions of dollars in firm orders posted over the past year and a backlog that would choke a horse, it has become increasingly difficult for Wall Street investors to ignore DHB.
3. Success breeds success for an underappreciated company like DHB. Recently much has been made of DHB's ranking in the IBD top 100 list. The significance of this is that it sets DHB apart from thousands of other companies competing for the same distinction, and that brings it to the attention of the many investors who monitor this well-respected stock survey very carefully. This listing seldom leads to an immediate jump in the stock price, but it does tend to validate the intrinsic worth of a company in the perception of the investment community.
A FINAL CAVEAT --
Now, if you're still inclined to short DHB be my guest. I might even buy some of your shares at the right price. This stock is suicide for shorts.
And if you're sitting on a long position with a modest gain I would strongly advise you against putting in an automatic stop limit sell order.
The AMEX market specialist for DHB, who can see all those limit orders, has a nasty habit of dropping the price for a minute to two during the trading day and taking out these orders. He'll buy your shares on the cheap to add to his own inventory so that he can sell them back later at a profit. It's a scam that is especially prevalent on the AMEX that you should be aware of.
Is this practice illegal? In the spirit of free and equal trading opportunities for all investors yes, always. In practice? Yes, but only if it can be shown that the market maker intentionally manipulated the stock price to his advantage, which is very difficult to prove. And so the practice persists.
In any case, with apologies for the long post, that's my current assessment of DHB.
Disclosure: I have owned the stock for more than a year. DHB is overweighted in my portfolio and I continue to rate the company, even at its current price, as a Strong Buy.
Join the best community on the web! Becoming a full member of the Fool Community is easy, takes just a minute, and is very inexpensive.
Great discussion regarding the recent volume pickup in DHB, and I agree with all the points that everyone made. There's no doubt that over the last year or two -- with some stammering and stuttering and halting and faltering along the way -- DHB has vindicated itself, executed its business strategy admirably, and emerged as the force to be reckoned with in an industry where demand for its products will continue to be very strong for the foreseeable future.
Become a Complete Fool