Shorting Harley Davidson: Honda Denies Talks
By Ian Cooper
If you’ve got a bridge to sell, there are plenty of investors that’ll buy anything these days.
Unbelievably, and without proper due diligence, giddy investors lined up to buy more than 30,000 July call options on Friday on a rumor that Honda would buy Harley Davidson?
My first reaction to the rumor, “Huh?”
Strike one – Due diligence would have raised the issue of “corporate culture” and regulatory hurdles from the FTC, which isn’t shy about crushing LBO dreams.
Strike two – If a deal were on the table, the combined union would have owned 65% of the U.S. motorcycle market. Yamaha would own 16%. More than likely, the FTC would have crushed this.
Strike three – did any one bother calling investor relations at Harley Davidson? I did. They returned my call this morning, confirming news that Honda denied talks. In the Honda release, a Honda spokesperson (as quoted by Reuters) said, “There’s absolutely no truth to it.”
Plus, let’s be real. Can you imagine if Honda bought Harley Davidson? Harley Davidson is an American company. The culture shock would take some getting used to for Harley employees, and Harley bike fans alike.
It’s imperative that you do due diligence. Without it, you’re stuck with the herd as they fall off the cliff.
Take Care,
Ian L. Cooper
Death Cross Trader