Investing in Smith & Wesson: Controversies and Opportunities

Shawn O’Malley and Daniel Mahnke break down Smith & Wesson (ticker: SWBI), an iconic firearms manufacturer with 170+ years of history. Smith & Wesson is no compounder, though. It’s an okay business, at best, but Shawn and Daniel want to determine whether this often-overlooked stock is cheaply priced.

In this episode, you’ll learn how Smith & Wesson has navigated the volatile sales cycle in firearms, what factors can drive the biggest swings in firearms sales, whether Smith & Wesson’s juicy dividend is sustainable, the biggest political and legal risks facing this company, what famous investor owns the stock, how Smith & Wesson shares can help an investor hedge societal disruptions, and whether Smith & Wesson is attractively valued on a normalized earnings basis plus so much more!

Prefer to watch? Click ⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠ to watch this episode on YouTube.

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

02:47 - The historic origins behind this company that predates the Civil War.

06:12 - Why “Sin” stocks can offer attractive returns from discounted valuations.

10:54 - What drives Smith & Wesson’s business.

23:17 - How the company navigates a range of factors that can impact it, from regulation to litigation, that are largely beyond its control.

35:17 - How the company’s relocation of its headquarters has added to its financial stress.

46:11 - The biggest challenges of investing in a “mean reversion” bet like Smith & Wesson.

01:01:15 - Whether Shawn & Daniel add SWBI to The Intrinsic Value Portfolio.

01:05:38 - Why Smith & Wesson may be a hedge against societal disruptions.

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

• Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠⁠.
• Sign Up for ⁠⁠⁠The Intrinsic Value Community.⁠⁠
• 2022 Value Investors’ Club Pitch of Smith & Wesson.
• Link to Smith & Wesson’s 2024 annual filing.
• Chit Chat Stocks’ coverage of Smith & Wesson
• Check out our previous Intrinsic Value breakdowns: ⁠⁠⁠⁠⁠⁠⁠⁠Nintendo⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠Airbnb⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠AutoZone⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠Alphabet⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠Ulta⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠John Deere⁠⁠⁠⁠⁠⁠⁠⁠, and ⁠⁠⁠⁠⁠⁠⁠⁠Madison Square Garden Sports⁠⁠⁠⁠⁠⁠⁠⁠.
• Check out the books mentioned in the podcast ⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠.
• Enjoy ad-free episodes when you subscribe to our ⁠⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠⁠.

NEW TO THE SHOW?

• Follow our official social media accounts: ⁠⁠⁠⁠⁠⁠⁠⁠X (Twitter)⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠⁠.
• Browse through all our episodes (complete with transcripts) ⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠.
• Try Shawn's favorite tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠⁠⁠⁠⁠TIP Finance⁠⁠⁠⁠⁠⁠⁠⁠.
• Enjoy exclusive perks from our ⁠⁠⁠⁠⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠⁠⁠⁠⁠.
• Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠⁠⁠⁠⁠.

SPONSORS

Support our free podcast by supporting our ⁠⁠⁠sponsors⁠⁠⁠:

• Airbnb

Connect with Shawn: ⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠Email⁠⁠⁠⁠⁠⁠⁠⁠

Connect with Daniel: ⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠Email⁠⁠⁠⁠⁠⁠⁠⁠

HELP US OUT!

Help us reach new listeners by leaving us a ⁠⁠⁠⁠⁠⁠⁠⁠rating and review⁠⁠⁠⁠⁠⁠⁠⁠ on ⁠⁠⁠⁠⁠⁠⁠⁠Spotify⁠⁠⁠⁠⁠⁠⁠⁠! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! 

Learn more about your ad choices. Visit megaphone.fm/adchoices

Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm