Is Smith & Wesson Holding Corp (SWHC) A Value Trap?

Smith & Wesson Holding Corp (NASDAQ:SWHC) released earnings after the market closes today, and Meson Capital Partners  expected some bad news. The company reported Q2 EPS of $0.09, $0.02 better than the analyst estimate of $0.07. Revenue for the quarter came in at $108.4 million versus the consensus estimate of $105.8 million. The hedge fund, which is shorting Smith & Wesson, cites falling demand, high fixed costs, and a history of poor asset allocation decisions as reasons to see this as a value trap instead of a buying opportunity.

“The best shorts, in my view, do not have crazy valuations that are liable to double - as it is well known...