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I read the prospectus. I searched the internet. I Google-alerted both CROX and Crocs and saw the stories. I did my DD. I put together the spreadsheets, I went to the stores. I scoured the papers for ads. I saw the silly looking shoes. My 2 year old fell in love with them and couldn't wait to grow into a pair. She readily absorbed and recognized the Logo. Now three, she will choose to wear the "Crocodile" shoes, regardless of weather. And for those who care to know, they don't do anything for her in the snow. But in the spring of '06 - I was ready to invest in CROX. But why didn't I?

 

Let me say that I am truly happy for anyone who invested in the company, especially if they knew about the founding father's foibles. I am truly happy that the management now in place is keeping investors happy, even though they are in the apparel business for the first time. I am really happy for those who visited the website this year and saw coffee mugs for sale in the accessories portion of the web site, not a full line of Crocs, Inc logo-ed apparel. And, I am truly happy for those whose CAPS score is bigger, fatter, and full of teeth. But for Me? Those Crocodile shoes are now causing me some crocodile tears as this pick has me clenched between its jaws and is dragging me to the bottom of the river.

 

My underperform call on CROX is the biggest loser I have. CROX has doubled and pulled back since I picked it to underperform the market. But why did I pick it to underperform? And why didn't I buy at $23 right when I had some money? The decision to call underperform came after an attempt to be rational.

 

I could make a bull and bear case - the bear won out because I just couldn't invest in the company because there is no apparent long-term moat. Style is fickle and shoes that by necessity have to have air holes just can't adapt.

 

Traditional shoe companies can adapt their lines to fit the latest in styles, Crocs just can't. Like their namesakes, the shoes will probably be around for ages in essentially the same form as when they evolved, but their ecosystem will be limited and their competition will encroach upon their territory. Sure, crocodiles can handle fresh and salt water and chew up anything smaller, but their numbers decrease in any ice age. The shoes just can't adapt.

 

That was the reason for the call: Long term thinking. And in the short-term, it has been the bane of my CAPS existence. I haven't hit end on that pick yet -- actually, I have, but I have changed my mind before market open the next day, every time. I have ended losing picks and seen the error of my stock picking ways. BUT - those crocodile tears I'm crying now will dry up; because in the end, no one will be singing songs about being buried with their Crocs on.

 

 

 

 

 

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