Advice for TASR investors

This is free advice. It is simply my opinion. Take it or leave it.

Based on my analysis (see the blog), I believe that - sooner or later - one of those seemingly-endless product liability lawsuits will stick. Even if Taser was as pure as the driven snow, they'd probably eventually lose a case just on the odds. But when there are as many controversial issues as there are, then the odds are just that much worse. And when one of those lawsuits finally sticks, and when all the appeals are finally exhausted, then all hell will break loose.

Every sale, every deployment, hangs above Taser like yet another Sword of Damocles. From a risk point of view, these swords block out the sun. The sale shows up as 'a positive' for one quarter's results, but then the risk remains for as long as that product is in the field.

Taser likes to make deals with their insurance company. What happens is that, at Taser's suggestion, the insurance company will simply pay Taser a few hundred thousand dollars and walk away, leaving Taser to defend themselves. Taser seems to do this because they don't want to have any settlements being made by their insurance company. So when that inevitable day finally comes, it'll be Taser having to bear the full costs of the eventual settlement.

The issue isn't that their products are dangerous. After all, companies sell guns and knives. The issue is that they've claimed, to varying degrees, that 'the taser' is safe. At times, their claim has been almost: 'The taser is perfectly safe.' If and when this claim of high or perfect safety is proven to be false, then the full force of American Tort Law will descend on Taser like a perfect storm.

Companies that make police hand guns don't suggest that a shot to the leg would be a valuable addition to the training regime. Companies that make flame throwers don't send out brochures to every Medical Examiner and Coroner in the land suggesting that 'Spontaneous Human Combustion' is a more-likely explanation for the burnt bodies. These sorts of actions are like those of someone as mad as a hatter.

And it really doesn't help that Stinger Systems makes similar products that use much lower currents. I'm not exactly a fan of Stinger Systems, but the apparent fact that their products reportedly perform the same function with perhaps 75 or 750 times less dangerous current than Taser's products smells like very bad news for Taser. I'm not sure if Stinger's claims are true, but if they are true, then the real impact will be in a product liability lawsuit against Taser.

In fact, if Stinger wants to 'take out' Taser, then they only need to show up at the next Taser product liability lawsuit and offer their services to the plaintiff as an (obviously hostile to Taser) expert witness on design of such products. If the plaintiff lawyer can find even one other truly independent expert witness to nod his head at the right time, then Taser's goose will be fully cooked.

So, you want to put your Navy Pension into this stock? Are you fricken insane? Geesh. At the very least, purchase a counter-balancing hedge in the form of a Long Put with a strike price of a few dollars (a very few dollars). As the Long Put expires, then buy another one. Cheap insurance.


Disclaimer: This is just one person's opinion. You do whatever you want. YMMV.