The Call @ Hedgeye | Tuesday, September 19, 2023 [REPLAY]

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TICKERS DISCUSSED LONGS: CCL, RCL, PINS SHORTS: DASH, CVNA, BOOT, SFIX, TXG, MPW, STLD, NUE OTHERS: CART, ETSY, PFE, KVYO

Broadcast Summary

Restaurants: Howard Penney - 00:00:20

• Sales: Industry sales slowdown is confirmed; 4 companies spoke at an industry conference and confirmed what we’ve been talking about; Red Robin was down 10% yesterday; higher gas prices and looming student loan repayment issue may have people scaling back on eating out
• Instacart (CART) [IPO]: Instacart priced their IPO at $30; $9.9 billion post deal market cap; on the eve of the CART announcement, DoorDash, Inc. (DASH) put out a press release announcing a significant expansion into the grocery delivery space; DASH remains a short

Consumer Staples: Daniel Biolsi - 00:05:54

• GOODLES: A healthy mac and cheese company, raised $13M in a Series A funding round led by L Catterton; the company launched in 2021; the pasta is made from wheat, chickpeas, and ground-up superfoods, including broccoli, in small amounts; the company is on track to triple its sales this year; GOODLES has 35,000 distribution points with retailers, including Target, Whole Foods, Publix, Sprouts Farmers Market, and HEB

Gaming, Lodging & Leisure: Sean Jenkins - 00:08:57

• Cruise Lines: Carnival Corporation & plc (CCL) & Royal Caribbean Cruises Ltd. (RCL) caught an upgrade; cites recent checks in their pricing and on the booking side; CCL prints earnings next Friday; space has been under pressure; price of oil has had an impact on cruise; CCL remains a long & RCL remains on the long bench

Retail: Brian McGough - 00:12:29

• Short Bench – Carvana Co. (CVNA): Upgraded from sell to neutral; we just added to our short bench; bond holders are fine, but equity holders are going to be in trouble over the next 8-12 months; CVNA remains on the short bench  
• Short Bench – Boot Barn Holdings, Inc. (BOOT): Took higher on our short list; seen a big decline in store visits; adding to their store footprint but traffic is still going down; great concept in Texas and Oklahoma but company has plans to grow in New York and California, areas where people don’t wear this type of apparel as frequently; BOOT remains on the short bench
• Short Bench – Stitch Fix, Inc. (SFIX): May go down as our best short ever; we went short at $76 and the stock is now at $2.80; put out earnings last night and beat the quarter but took down Q2 guidance by a country mile; announced it will close its European operations; no take out optionality here; $2 in cash on the balance sheet, but it’s burning through this cash; SFIX remains on the short bench
• Removing from Short Bench – Etsy, Inc. (ETSY): Went short at $270, stock is now at $63; we would not be buyers, at least not at this price; growth is stagnating and not accelerating

Healthcare: Tom Tobin - 00:22:42

• Short – 10x Genomics, Inc. (TXG): Down high single digits on the day; end market is tapped; slowing a lot faster than expectations; government shutdown looms large for them; incremental risk here; structurally the company also has problems; TXG remains a short

Healthcare Policy: Emily Evans - 00:26:11

• Pfizer Inc. (PFE): Moderna and Pfizer traded off in response to some conference commentary where PFE said they are expecting 24% uptake in covid vaccine booster; Street thought this would be higher; we doubt that they get to 24%; leaves PFE relying on their non-COVID business

Macro, Housing & Financials: Josh Steiner - 00:30:02

• Builder Confidence: Builder confidence numbers out yesterday; significant MoM decline; 11-point drop in the last couple months; series goes back to 1985; only been ~10 times where we’ve seen an 11-point drop in a 2-month span
• Jobs: Data series in WSJ looking at share of job creation this year vs years prior in the government sector; in years past, government jobs have accounted for 5-6% in jobs created in any given year; this year, YTD they are accounting for 19% of jobs; pretty significant shift here

REITs: Rob Simone - 00:38:34

• Short – Medical Properties Trust, Inc. (MPW): Cut dividend in half on August 21^st of this year; the spread on their USD denominated bonds has widened 250 basis points since then; MPW remains a short

Industrials: Jay Van Sciver - 00:42:51

• Shorts – Steel Dynamics, Inc. (STLD) & Nucor Corporation (NUE): Nucor and Steel Dynamics lowered their near-term outlook; cutting estimates; dwindling order backlogs; STLD & NUE remain shorts
• Water Infrastructure Black Book on Thursday (9/21) at 2:00pm ET

Technology: Ami Joseph - 00:47:42

• Klaviyo, Inc. (KVYO): Will price today and trade tomorrow; they are a leader in part of the marketing tech stack especially around email; have a flexible architecture so they can continue to grow; a lot of their success is credited to Shopify merchants; small float being offered; $100 million already being bought by large institutions

Communications: Billy Zegras - 00:51:29

• Long – Pinterest, Inc. (PINS): Hosting their investor day today; we are not expecting any long-term guidance today; we are above the Street in revenue growth; we think there is a path back to 30%+ top line revenue growth; PINS continues to use A.I. in their ad products; PINS remains a long

Telecom-Media Policy: Paul Glenchur - 00:55:47

• CHIPS Act: Lot of restrictions on getting money from the CHIPS Act; requirements about childcare for subsidiary recipients; restrictions around China and other adversarial countries; this will all be aired out in a committee today in the House
• CR: Huge fight on the budget and appropriations bills; Republicans can’t get their act together on a CR that would probably get shot down in the Senate anyway; have a few more days to try to work something out

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