Mr. Hardiman: The names we cover really run the gamut. We cover the power sports players, such as Harley-Davidson (HOG), Polaris (PII), Arctic Cat (ACAT), as well as the boating companies — Brunswick (BC) being the boat maker, MarineMax (HZO) being the boat retailer — and then we put Callaway Golf (ELY) in there as well. So that's six names. And then Cedar Fair (FUN) is probably the last. There is no great category for Cedar Fair. It's clearly a leisure name, but it's not so much a product company like most of our other names. We cover leisure and gaming and Cedar Fair has a lot in common with both. They obviously don't own any casinos, but Cedar Fair is a company that basically manages a portfolio of properties, which is very similar to what the big gaming operators do.
TWST: What makes the power sport companies appealing?
Mr. Hardiman: From a longer-term macro perspective, a lot of these companies
target that higher end consumer. So, on average, a Harley-Davidson owner makes
probably $80,000 a year; similarly, boaters and golfers make somewhere in that
neighborhood, snowmobile owners a little less and ATV owners a little less than
that. But clearly what we've seen historically is that the higher-end consumer
is typically the last to see weakness and the first to recover. So with that
dynamic, when you're dealing with cyclicals, you like to be dealing with
cyclicals that are going to outperform some of the other cyclicals, and we think
that targeting that high-end consumer is an interesting and positive place to
be. That being said, right now that high-end consumer is feeling it as much as
anybody.
Tickers included in this excerpt: BC, FUN, HOG, HZO, PII
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.