Deckers Outdoor Corporation (NASDAQ: DECK) has stood out of late for more than just one reason. The longer-term issue that is hurting Deckers is the warm winter. With Uggs being so popular in cold weather, a warm winter was no welcome sign for the company. This is not new information because shares hit a new 52-week low today. The weather issue has been well telegraphed.
What has not really captured too much attention is the activity from short sellers and put option buyers. The short interest came out this week and it was shocking to see the growth and consistency of the short interest. The March 15 settlement date had a year high of short shares at 7.925 million. This was the fourth consecutive gain in the short interest and was up from 4.99 million shares short as far back as January 13.
The bets against Deckers have been evident in stock options with the largest open interest in this one being the April-2012 $65 Puts with an open interest of 7,578 contracts.
Since the CEO has not spoken much, short sellers and put buyers get to keep winning. The stock hit a 52-week low of $61.76 today and the prior 52-week trading range was $63.04 to $118.90.
You could argue that at 12.2-times expected 2012 earnings the stock is finally cheap. Short sellers will argue that it only looks cheap but that is a value trap because they will not be able to make their earnings targets. Until the company says something one way or another, short sellers and put buyers may keep the pressure on here in Deckers.
JON C. OGG