Hansen's Natural Model Stock 2004

Hansen’s Natural
Model Stock 2004

The Company
● Hansen’s Natural in 2004 (HANS)
● Since 2012 called Monster Beverage
Corporation (MNST)
● Making natural sodas and juices in Southern
California since the 1930’s
● N factor: Monster Energy drink introduced in
April 2002
Why pick this stock? IBD Aug 23, 2004 (published Aug 20), page B1
● #46 on IBD 100 list

● 126% EPS growth last quarter
● 62% sales growth last quarter
● 96 Composite Rating
● 91 EPS Rating
● 98 Relative Strength
● 18% RoE
● Management owns 44%
● 4 quarters of rising sponsorship
Negative:
● Low Pretax Margin of 8%
(it’s in the retail sector)
Aug 20, 2004 (Fri) - Weekly Chart
2000 Market Top At 29.10 by June 2004.
Long Bear Market Gains 512% in 11 months.
9-week Cup with Handle

forms, 1st stage. 39% deep.
V-shaped with deep handle.
This happens while the
market deepens its
correction and undercuts
the previous low.
2 year consolidation.
Monster Energy drink is
Breaks out in July 2003.
introduced in April 2002
Pivot is 4.75.
Aug 20, 2004 (Fri) - Daily Chart
Regular CWH buy point at 25.29. And two early buy Market Correction
points for sloping trendlines, one more aggressive

(steeper) than the other. Also, the stock is trying to
retake the 50-day line. The handle shouldn’t get
much lower than it already is. The market has started
to turn around, so the 50-day line could be used as
an early buy point.
Aug 23, 2004 (Mon) - Daily Chart
Opens 10 cents above the previous day’s high, at
22.24 and above the 50-day line. I am getting filled at
22.32. I am using 10 cents above Friday’s high as my
ideal buy point, which is 22.24. I enter orders to buy
the B2 2% above at 22.68, and the B3 4% above at
23.13. Both orders get filled the same day at 22.74 B1-3
and 23.18.
Aug 23, 2004 (Mon) - End of Day Analysis
● Margin account with $20,000 cash

● Using cash to buy the core position
● Using margin for add-ons
● Add-ons will be a percentage of the currently held shares
Sep 1, 2004 (Wed) - Daily Chart
Breaking out from the CWH pivot Sep 1, 2004 on
very strong volume. I make a 20% add-on (A1)
at 25.29 as the stock has advanced enough and
both volume and RS line are confirming.
A1
Sep 1, 2004 (Wed) - End of Day Analysis
Sep 2, 2004 (Thu) - Daily Chart
Quickly advances toward new
highs. I am planning to make a
20% add-on buy as soon as
29.20 is reached.
Sep 7, 2004 (Tue) - Daily Chart
Gets up to two cents below
the old high before retreating.
No add-on is made.
Sep 13, 2004 (Mon) - Daily Chart
Opens at a new high at 29.56 and triggers a
20% add-on (A2) at 29.68 before going a little
bit higher. Then it reverses hard, hitting the
-7% stop for the add-on at 27.50 and finally
A2
stopping out the core position and the A1 Sold A2
add-on down 14.5% from the high of the day Sold all
at 25.80.
Shares Applied Sell Rule
A2 #18 Breakout Failed
A1 #3 Decline From Peak
B1-3 #3 Decline From Peak

Sep 13, 2004 (Mon) - End of Day Analysis
Still made a good profit!

Nov 10, 2004 (Wed) - Daily Chart
Has formed a new 1st stage Cup with Handle Throwbacks
base, tighter and sitting above the 50-day line. A
short handle has formed as price bounces back B1
quickly after another throwback just 4 days

earlier. This and the rising RS line are showing
strength. High volume, a wide range, and a
very bullish close near the 29.88 pivot are signs
of a likely breakout the next day. I am buying the
B1 near the close at 29.11.
Nov 10, 2004 (Wed) - End of Day Analysis
Nov 11, 2004 (Thu) - Daily Chart
Breaks out and triggers the B2
purchase at 29.72 and the B3 at
30.30. The RS line and strong B1
B3
volume confirm the breakout. B2
Has formed a new 1st stage Cup with Handle base,

tighter and sitting above the 50-day line. A short
handle has formed as price bounces back quickly after
another throwback just 4 days earlier. This and the
rising RS line are showing strength. High volume, a
wide range, and a very bullish close near the 29.88
pivot are signs of a likely breakout the next day. I am
buying the B1 near the close at 29.11.
Nov 11, 2004 (Thu) - End of Day Analysis
Falls back below the pivot on +99% volume.
Closes 1.5% below the pivot. Sell Rule #12 (Failed
Breakout) does not yet apply, because the stock B1
has gone down on high volume only for one day,

not several - and because it’s only down 1.5%, not
4 or 5. So I must hold the stock, even though it
doesn’t look good. But looking at the previous
throwback 9 days prior I can have some hope that
the stock will quickly bounce back over the next
couple of days.
Nov 18, 2004 (Thu) - Daily Chart
The pivot is retaken the next day on
good volume. Constitutes tennis
ball action. This is what we want to
see. RS line and volume confirm.

Nov 18, 2004 (Thu) - End of Day Analysis
Dec 21, 2004 (Tue) - Daily Chart
After another throwback on
Dec 7 the stock comes close
to -14.5% Decline From The B1
Peak sell point on Dec 21, but

recovers nicely.

Dec 24, 2004 (Fri) - Weekly Chart
Bounces off the 10-week line
on volume, so I am making a A1
20% add-on buy (A1) at the end

of the week.
Dec 24, 2004 (Fri) - Daily Chart
Bounces off the 10-week line
on volume, so I am making a
20% add-on buy (A1) at the end A1
of the week.
Jan 3, 2005 (Mon) - Daily Chart
Up 25% from pivot, but only
36 days have passed. I
cannot sell yet, because I
must wait 40 days before I
can take profits.
Almost up 25% from the pivot
(10 cents more) and 40 days
have passed. I may soon sell it
to take profits, but I may be
able to hold it. See next slide.
Hold Hansen’s For Long-Term Gains?
Sell Rule #22 decides if I can hold the stock for bigger gains.
We just came out of a 19% correction.
See next slide.

Is Hansen’s a Big Stock?
Big Stock Characteristics
1. Massive volume in prior uptrend Yes

2. Liquid, trades $50M to more than $1B per day Yes (not quite, but general market volume was lower
back in 2005)
3. Strong earnings, EPS growth >50%, especially >100% Yes
4. Strong sales growth and a compelling something new Yes
5. Usually higher RoE and PTM, with PTM improving Yes (Forbes lists an RoE of 21% in Sep ‘05, PTM
8% is low, but not bad for a retail business, not sure if it’s improving)
6. Accelerating earnings growth at some point in recent past Yes
7. Strong demand/supply, average volume (much) greater than 1% of float and
an IBD Supply/Demand Rating of 85 or more Yes
8. Very strong RS line in the 12 o’clock to 2 o’clock range Yes
9. Trades tightly after big runup Relatively tight
10. Tight daily and weekly ranges and closes Fairly Tight
11. Gap-ups in the pattern Yes
12. Extreme volume dry-ups along lows of base and handle Yes
13. Exhibits tendency to go up 5 or more weeks in a row, often times 7 or 9 weeks or more No
14. Owned by good mutual funds Yes
15. High management ownership Yes
Hold Hansen’s For Long-Term Gains? Conclusion
● Can be held for long-term gains

● Not taking profits at +25% from the pivot as usual
● Sell Rule #22 allows it
● Hansen’s has enough Big Stock characteristics
● We are within 18 months of a 15% correction
Feb 4, 2005 (Fri) - Weekly Chart
13 weeks out of base the stock is doing very well, up 54% from
the pivot. The RS line is advancing strongly at a 1 o’clock
position. I decide to apply the Big Cushion rules, even though the
stock isn’t up 60% from the pivot yet. Sell Rule #22 allows me to
do this earlier, based on the strong 10-week line. Price closed
the week 25.7% above the 10-week line and it has been several
weeks since the last touch of the average. A pullback toward the
line wouldn’t be unexpected after such an extended position. The
Big Cushion rules will help me to stay in the stock even if there is
a significant pullback.
Big Cushion Sell Rules (Up 60%)
1. Key objective to hold and sell into a climax top. This can deliver huge gains in the final
few weeks of holding a big winner.
2. Otherwise sell if there is a significant change in character from strong to weak. It is
better to sell too soon, into strength that too late after weakness has set in.
a. Sell when the stock closes the first week below the 10- week line on volume ≥ 30%
to 40% above the weekly average. An exception can be made is it closes just a
percent or two below, and/or if the week is a support week. Simmonds Precision
Example IBD 11/28/2012.
b. Multiple, persistent signs of weakness.
c. Sudden, dramatic change in character, a very damaging news item (NUC Jan 2014),
or very negative event or a plunge > 15% below the 10-week.
Sell Rule #22 Allows Big Cushion Sell Rules
Feb 7, 2005 (Mon) - Daily Chart
Closes at a new high and the
high of the day, at 47.49. Only
31 cents below the +60% mark
from the pivot.
Feb 8, 2005 (Tue) - Daily Chart
Plunges 16% in one day on very
high volume. There was no
particular news item I could find.
Let’s see if this can recover or if I
need to sell it soon.
At the end of the week we have a
distribution bar, but it appears
that it found support at the
10-week line. Need to hold. We
might see more distribution, but
hopefully the 10-week line will
hold. If not, we have sell rules.
Next week also shows
distribution (stalling), but it’s an
inside week and it closes higher
for the week.
This week has a bullish bar, but
volume is below average. Still,
confirms support at the 10-week
line and I am feeling a lot better
now.
Mar 4, 2005 (Fri) - Weekly Chart
Another bullish bar, closing near
all-time highs. But volume is
again lower, not a good sign. The
next earnings report is due
March 14.
Mar 11, 2005 (Fri) - Weekly Chart
The last week before the earnings release
shows support. It’s closing near the middle of
the week’s range on slightly above average
volume. It also doesn’t undercut the 10-week
line, which has served as very reliable support
since the last base. Institutions seem to be
confident in the company’s ability to deliver a
good earnings report.
Mar 11, 2005 (Fri) - Daily Chart
The week and last day before
the earnings report closes with
pocket pivot.
Mar 14, 2005 (Mon) - Daily Chart
After the earnings release. The
stock is higher in pre-market
trading, so I decide to make a
25% add-on at the open as the A2
stock is likely to gap up. I get

filled at 46.76. The stock closes
up 26% for the day. Volume is
10x average.
Mar 14, 2005 (Mon) - End of Day Analysis
Apr 18, 2005 (Mon) - Daily Chart
After the earnings release the stock Low-volume
quickly rockets higher on strong pullback after
new highs.
volume showing institutional
accumulation. Then the stock has a
low-volume pullback for 9 days A3
ending with a pocket pivot up day.
The RS line is holding up well. I A2
make a 20% add-on at the close.
PP
Apr 18, 2005 (Mon) - End of Day Analysis
May 9, 2005 (Mon) - Daily Chart
Day before the next earnings
release. The stock is very much
extended and is closing at a new
high after running up for quite
some time. Because of this I am
not planning to make an add-on A3
buy if the earnings report is well A2
received the next day.

Gaps up after the earnings
release in the morning, near the
high for the day. Then reverses
to close lower. Volume was very
high. Very negative action and a
sharp pullback is likely. Any adds
here should have been sold at A2
the end of the day.

May 13, 2005 (Fri) - Weekly Chart
Not looking good by the end of Added after
the week. Bad reversal on the earnings
highest volume since the Bought core

position
beginning of the move. It’s
possible that the stock has Added after
pullback
topped.
Added after
pullback
Looking better the next week. It Added after
refuses to decline further, though earnings
volume is below average. We will Bought core

position
have to see the next couple of
weeks to get a clearer picture. Added after
pullback
Added after
pullback
Jun 10, 2005 (Fri) - Weekly Chart
Rallies to new highs for four
Added after
weeks in a row. Volume is high, earnings
but below the recent average.
Bought core
position
Added after
pullback
Added after
pullback
Jul 22, 2005 (Fri) - Weekly Chart
Another big distribution week.
Volume is twice the average. Added after
earnings
Bought core
position
Added after
pullback
Added after
pullback
Aug 8, 2005 (Mon) - Daily Chart
The day before the next earnings
release is a pocket pivot day. As More than
Added after
with the last earnings release I doubled since the earnings
am not planning to make an last add-on.
Bought core
add-on after the earnings release position
as the stock is highly extended. Added after

pullback
Added after
pullback
A3
A2
Aug 9, 2005 (Tue) - Daily Chart
Gaps up nearly 10% at the
open before quickly open
reversing and closing lower
on very high volume. The
stock is likely to go lower.
Also, the stock is split 2:1.
Yet another big distribution week.
Volume is again twice the average. Added after
Wide range. Goes 7% below the earnings
10-week line during the week, but Bought core

closes near the average. This is the position
Added after
first time the stock has gone below the pullback
10-week line. Its support appears to be

weakening as the stock seems to be in
need of a resting period. The RS line Added after
also has pulled in somewhat. pullback
Closes 2% below the
10-week line, but volume is
very low. The range is very
tight. Not many participants
are selling, but neither are
they buying. Need to hold.
Retakes the 10-week line and
closes the week 1.1% above it.
Volume is up, but still below
average. Pattern Recognition is
now showing a 6-week
consolidation that is 24% deep.
This would be a 2nd stage base.
Sep 2, 2005 (Fri) - Weekly Chart
The RS line moves into new
high ground next week as the
stock pushes off the 10-week
line on below average volume.
Testing the 10-week line again
and closes 1.7% below it.
Volume is below average, but
picked up from the last week.
Breaks below the 10-week line
on slightly below average
volume. Is 13% below the
average at the low for the week,
and closes the week 10.7%
below the 10-week line. The RS
line has turned down.
Just as I think it has failed and I
have to sell it soon it retakes
the 10-week line by the end of
the next week. Volume is still
below average, so celebration
might be premature.
Oct 7, 2005 (Fri) - Weekly Chart
Holds the 10-week line on just
above average volume and with
a tight weekly range. The RS is
holding up and has not
deteriorated further. This is a
sign of support. Hold.
Oct 14, 2005 (Fri) - Weekly Chart
Closes 3.1% below the
10-week line on below average
volume. This week showed
signs of support, closing at 63%
of the weekly range. The next
earnings release is on
November 9.
Oct 27, 2005 (Thu) - Daily Chart
24.0% 23.4% 17.0% 9.1%
Irregular 27% deep 2nd stage base, 15 weeks long. The standard buy
point is 54.10. An early buy point exists at 51.75. The consolidation also
shows the Minervini Volatility Contraction Pattern (VCP). The three most
recent waves were 23, 17, and so far 9% for the current one. There is
another subtle sign of strength. The last wave didn’t undercut the
previous wave’s low and it went slightly higher. All of this is very positive. If
we we are not going down much more this would present an entry at 48.50
and a buying opportunity before the earnings release that might give me
enough of a cushion to hold through the release.
Oct 28, 2005 (Fri) - Daily Chart
Ends the week with a pocket pivot. It’s not D>B and C>A
going above the 44.50 early entry buy point,
but I make a B1 buy, because this is a B D
good-looking pocket pivot and I anticipate it A4
going higher. I size my buy as another B1 for
a full new position, and I am planning to buy C
A
my B2 and B3 if the stock moves higher. The
outstanding earnings release is a big
unknown. For accounting purposes I will call
these positions A4, A5, and A6.
PP
Oct 28, 2005 (Fri) - End of Day Analysis
Oct 31, 2005 (Mon) - Daily Chart
B2 follow-up buy 2% above the B1.
Recorded as A5. A6
B3 follow-up buy 4% above the B1. A5
Recorded as A6.
Shooting up above the early buy

point on strong volume. This is
looking very good.
Oct 31, 2005 (Mon) - End of Day Analysis
The earnings release is next
Wednesday. I am making
another small add-on buy
(10%) as the stock breaks out A7
to new highs on volume with a

leading RS line. Price has
advanced sufficiently since the
last purchase.
Gaps up after the earnings
release. I make another 20%
add-on buy at the open. Moves A8
6.2% below the purchase
intraday, not stopping it out.
Dec 16, 2005 (Fri) - Weekly Chart
Goes up 6 weeks in a row after
2nd stage base
the breakout from the 2nd stage
base. Triggers the Certain-teed
Rule as it is up 35% in the first
3 weeks. 1st stage bases
Start of runup
Jan 6, 2006 (Fri) - Daily Chart
Goes sideways for 4 weeks and
stays within 13.6% of the high. A9
It could be called a Square Box
base. Ends the week with a
pocket pivot that I use to make
a 20% add-on at the end of the
day.
Jan 6, 2006 (Wed) - End of Day Analysis
Breaks out of the Square Box
Base after completing 4 weeks.
Volume is 90% above average
and the RS line is confirming.
Jan 13, 2006 (Fri) - Weekly Chart
The weekly chart also confirms
the breakout by the end of the
week.
Pulls all the way to the pivot
and the 10-week line over the
next three weeks. Volume is
light though. Closes just under
the 10-week line.
Next week it closes 4.4% below
the 10-week line on volume 14%
above average. Undercuts the
moving average 11% intraweek.
Must hold.
Retakes the 10-week line the
next week. But volume is below
average, so this basing period
might not be over yet.
Mar 8, 2006 (Wed) - Daily Chart
Day before the next earnings One distribution
week and one
release. Has formed a very support week,
resulting in a net bar
symmetric 7-week Cup base, 26% count of 0. I am not
deep. This is a 3rd stage base. The planning to make an
add-on if the stock
RS line is holding up very well. There breaks out of the
base after earnings.
is neither clear distribution nor
accumulation displayed. I am not
planning to make an add-on,
because of the unclear situation and
because this is late stage.
Mar 9, 2006 (Thu) - Daily Chart
Gaps up at the open, breaking out of
the Cup base, but then quickly
reverses lower. It goes 9% below the
open price and closes near the
bottom of the day’s range on very
high volume. This is very negative
action.
Mar 10, 2006 (Fri) - Daily Chart
The pivot is retaken the very next
day on very high volume. The RS A10
line is again in new high ground.

This is very positive action and the
stock is likely to go higher. All of the
sellers seem to have been driven
out of the stock. I make a 10% add
on near the close.
Mar 10, 2006 (Fri) - End of Day Analysis
Apr 14, 2006 (Fri) - Weekly Chart
A 3WT with a buy point of 3WT
129.90 forms. I am
considering a small add-on.
Apr 18, 2006 (Tue) - Daily Chart
Hits 3WT buy point. I am
adding 5% (A11). A11
Apr 21, 2006 (Fri) - Weekly Chart
Closes well for the week. A11
Day before the next
earnings release. The
stock is very extended. I
am not planning to make
an an add-on after the
earnings release.
The day after the earnings
release. Closes up 16% on open
very high volume. I am not
adding as planned as the stock
is very extended. The RS line
at a 12 o’clock position.
End of the week.
This is starting to
look climactic.
Forms 3WT, but falls
back to the 10-week line
instead of breaking out
to new highs.
Falls 7% below the
10-week line intraweek,
but closes 1.8% above it.
Volume is above average
for the last two weeks as
the stock pulls back.
Forms 7-week, 27% deep 4th stage double
bottom base. The RS line is at new highs
before price, a positive. The net bar count for
the new base is +1, another positive. I am
not planning to make any add-on buys if the
stock breaks out as this is a late-stage base.
It might actually be good selling into a
potential breakout, especially if it shows
signs of weakness.
Jul 7, 2006 (Fri) - Weekly Chart
Breaks out the next week. Weekly
volume is above average and
rising. The RS line is well ahead in
new high ground.
Jul 10, 2006 (Mon) - Daily Chart
4:1 stock split and it’s coming back into
the base on volume. Institutions might
use the oversized split as an opportunity
to liquidate their long-term holding and
take profits. This comes after a 2:1 split
less than a year ago. This is a classical
sell signal mentioned in HTMMIS. I sell
my entire position near the end of the
day as price pulls back below the DB
pivot on high volume after stalling on high
volume just a few days ago.
Jul 10, 2006 (Mon) - Final Result
Summary
● Started position in August 2004

● Sold all in July 2006
● Almost two years in the stock
● Made numerous add-ons
● Started with $20,000 in a margin account
● Ended up with $1M (50x)
● Margin can be very powerful if used properly
● Original core position was made without margin
● Add-ons all made on margin
● Profits on the add-ons were 71% of the overall profit

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Hansen’s Natural

Model Stock 2004

● #46 on IBD 100 list

9-week Cup with Handle

points for sloping trendlines, one more aggressive

● Margin account with $20,000 cash

Shares Applied Sell Rule

A2 #18 Breakout Failed

A1 #3 Decline From Peak

B1-3 #3 Decline From Peak

Still made a good profit!

quickly after another throwback just 4 days

Has formed a new 1st stage Cup with Handle base,

has gone down on high volume only for one day,

Has formed a new 1st stage Cup with Handle base,

Peak sell point on Dec 21, but

Has formed a new 1st stage Cup with Handle base,

20% add-on buy (A1) at the end

We just came out of a 19% correction.

See next slide.

1. Massive volume in prior uptrend Yes

● Can be held for long-term gains

stock is likely to gap up. I get

make a 20% add-on at the close.

received the next day.

the end of the day.

highest volume since the Bought core

volume is below average. We will Bought core

as the stock is highly extended. Added after

10-week line during the week, but Bought core

10-week line. Its support appears to be

24.0% 23.4% 17.0% 9.1%

B3 follow-up buy 4% above the B1. A5

Shooting up above the early buy

to new highs on volume with a

line is again in new high ground.

● Started position in August 2004

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