DECK is best know for their UGG Boots, but the company has made efforts to diversify their product line. According to DECK’s latest 10Q, UGG products still however make up 75% of revenues, but it is a step in the correct direction. The market is discounting these efforts; when compared to their peers. From a quantitative prospective, DECK shares trade at about 10.8x trailing EPS and more importantly 13.3x forward EPS…a discount to the market and its peers. DECK shares should move as a result of fundamental catalysts like consumer spending, valuation, performance metrics, eCommerce, material costs, and revenue trends.
DECK has captured the interest of the Wall Street short seller. Over 40% of the available shares have been sold short. This is indeed a risk to the story. There is potential for a short squeeze, but there is also potential for something that the shorts see that longs don’t. It seems as though the DECK story may break up or down in a major way because of the short interest.
Paper bought 4747 March 34 Puts for $.05 when stock was trading $45.43
Paper bought 1000 QEP June 30 Calls for $2.10 (2.7 times usual volume) when stock was trading $29.70
Paper sold 7000 HCA March 34.5 Puts for $.55 (8.4 times usual volume) when stock was trading $36.06