Is Heavily Shorted Sturm, Ruger (RGR) Poised for Upside?

November 20, 2012 12:04 PM EST
Is Sturm, Ruger, & Co (NYSE: RGR) about to rip much, much higher?

After markets closed Monday, Sturm, Ruger declared a special one-time dividend of $4.50 per share, which bears a yield of about 9.2 percent. Today, shares are pricing the move in, with the stock up about 7 percent on the session.

However, market data also points out that Sturm, Ruger is one of the more heavily shorted stocks out there. About 8.05 million shares have been sold with purchase expected at a later date. The number equals about 42 percent of all outstanding common.

Looking at a chart over the last year and you see that Sturm, Ruger peaked out around this time at several points in the past. Shares hit $50.88 at the end of July, $52.03 in mid September, and $52.65 just a few weeks back. The might mean somewhere between $53 and $55 is when a bunch of shorts might trigger.

Given the substantial negativity on shares, traders looking for a little risk might want to keep this one in the periscope.

Also of note, peer Smith & Wesson has about 8.8 million shares being held short, though that amounts to just 13.5 percent of its total outstanding common.

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RugerFan on 2012-11-21 15:44:06
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The proper corporate name is Sturm, Ruger & Co., Inc., not Strum.

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