24/7 Wall St.

Two Fridays ago, shares of Harley-Davidson, Inc. (NYSE:HOG) fell some $5.00 to under $50.00 for the first time since Summer of 2006.  From last Summer shares did rise more than 40% before the end of 2006, but it is obvious that weaker housing, credit woes, weak autos, a tired consumer, deteriorating credit scores, and a myriad of other conditions aren’t helping the company at all.  Even supercharged foreign purchasing from a weak dollar isn’t helping the company offset weak US-sales.

Today, shares are at yet another 52-week low at $46.30, under the $46.35 lows from last Friday.  Since Hog’s shares have fallen so much two Fridays ago, it has only seen one single day where shares closed up for the trading session.  That cannot continue forever.  But the stock was in trouble long before this last dive.  Shares started around $70.00 at the start of 2007 and slid steadily into the warning. 

Before today, this has seen 30 million shares trade hands since two fateful Fridays ago.  A lot of this can be attributed to institutions selling, but a lot of the selling is from Joe Q. Public.  Unless institutions are deciding that they want to try bottom fishing into a hoped-for rate cut from the FOMC, it seems as though there could be more block selling in the stock.  We do not have the September short interest yet, but the short interest in Agust actually shrank to 14.9+ million shares from the 16.5+ million shares in July. 

Stocks that hit 52-week lows do eventually recover.  But many of the traditional financial institutions don’t try to catch a falling knife.  Harley-Davidson as a brand has one of the most loyal customer bases out there that has crossed well into the upper-income brackets, and with almost a $12 Billion market cap has roughly 30% of its share float owned by retail investors.  When this turns back up it will turn fast.  Very fast.  The question boils down to from what share price that will be the case.

Jon C. Ogg
September 17, 2007