11/27/23 07:30 AM EST

The Call @ Hedgeye | Monday, November 27, 2023 [REPLAY]

LONGS: TAP, FL, UNH

SHORTS: SBUX, GME, HIBB, PSEC, DE

OTHERS: PFE

Short – Starbucks Corp. (SBUX): Tomorrow at 12:30pm ET we will go through the SBUX playbook for 2024; we’ve been short for about a year, has not been a great short; we will go through the issues they will face in the first half of the calendar year; the company has missed a number of metrics for the turnaround plan they laid out in 2022; SBUX remains a short

Long – Molson Coors Beverage Company (TAP): The Ontario government is considering changing the way beer is sold under its Master Framework Agreement (MFA); since the end of prohibition, beer in Ontario has primarily and sometimes nearly exclusively been sold at a single chain of stores that only sells beer; the 10-year contract between the Beer Store and the province expires at the end of 2025; the Beer Store has exclusive rights to sell beer in 12 and 24-packs and limited competition under the MFA; the Beer Store is 48% owned by Molson, 48% by Labatt, and the remainder by Sapporo; TAP remains a long

Cruise: Wave season runs from right after Thanksgiving through early March; promotions look a bit better; our models are showing pricing is really strong; we are hosting a leisure deck on Friday; we will dispel all the narratives about peak leisure

Moving to Short Bench – GameStop Corp. (GME): We are moving GME down to the short bench from a best idea short; we went short in the $20s and the stock has gotten hammered; getting close to cash value; the business is unfixable, and the company will continue to burn through cash; GME is now on the short bench
Short Bench – Hibbett, Inc. (HIBB): 75% of its sales are Nike; it’s time to get heavier on the short side; we think Nike is going to go back fully to Foot Locker; a lot of the allocations that were going to HIBB are now going to Foot Locker, Inc. (FL); HIBB remains on the short bench & FL remains a long

Quad 4: Our Quad Factor screen continues to favor healthcare in a Quad 4 environment; from a seasonal standpoint, Q4 is typically a time of re-acceleration in healthcare consumption; UnitedHealth Group Inc. (UNH) is hosting their investor day this week; UNH remains on the long bench

Pfizer Inc. (PFE): Pfizer is suing Poland for $1.5 billion Euros; EU negotiated a contract to purchase 1 billion doses of the vaccine; this obligated Poland to make purchases it didn’t feel it should make due to waning demand

Bank Lending: Further rate of change slowdown in total bank lending across the U.S.; September was up 4.5%, October slowed to 3.8% and November slowed to 3.2%; total lending growth continues to slow; this will ultimately slow GDP growth; auto lending is increasingly negative; credit card lending has slowed as well
Quarterly Themes: We will be hosting our Quarterly Housing Themes Call this Thursday at 12:30pm ET

Short – Prospect Capital Corp. (PSEC): We are hosting our New Short PSEC Black Book on Wednesday morning at 10am ET; this will be our 2024 project; PSEC has a very concentrated exposure to a private REIT that primarily invests in multi-family properties; this is essentially the CEO’s family office; packed with very perverse incentives; selling non-traded cumulative preferred stock down the retail distribution channels; this is an arrangement that is being propped up by retail investors; PSEC remains a short

Short – Deere & Company (DE): We are hosting our deck Today at 2pm ET on Deere and will provide an update on our biofuels data; big cycle in ag has been driven by the introduction of ethanol in gasoline; Deere has headwinds that this management team doesn’t want to talk about; we will go across the ag complex today with a focus on Deere; DE remains a short

NFL: The NFL delivered across America on Thursday and Friday; four games on Thursday and a game on Black Friday; Fox, CBS, NBC, and Amazon all aired games; Amazon’s game on Black Friday was the first time the NFL has ever had a game on Black Friday; 49ers and Seahawks played at the Primetime slot and had close to 27 million viewers; 41 million viewers for the Dallas Cowboys game; 3^rd most watched regular season game in NFL history; huge weekend for broadcast cable and streaming

Foreign Aid: Congress is back in session this week; first item on the agenda is foreign aid divided between Israel, Ukraine, the border, and Taiwan; we have a cease fire in Gaza right now; the war in Ukraine wages on; House and Senate are going to meet in a conference committee this week on the NDAA

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