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

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TICKERS DISCUSSED LONGS: PRGO, VAC, FDX, PINS SHORTS: BROS, PK, PEB, XHR, W, TGT, HD, LOW, MPW, ODFL OTHERS: PFE, SE

Broadcast Summary

Restaurants: Howard Penney - 00:00:16

• Short – Dutch Bros, Inc. (BROS): Hosting our Short BROS Black Book today at 12:30pm ET; going through red flags in our call today

Consumer Staples: Daniel Biolsi - 00:01:50

• Long – Perrigo Company plc (PRGO): Reports after the close today; with depleted inventory levels at retail for Cough & Cold, a better outlook for Oral Care from lower freight rates, additional Infant Formula production capacity (better for revenue growth and margins), and continued synergies from HRA, Perrigo's 2023 is set up to put the challenges of 2022 behind; setting expectations that investors have confidence in that can be exceeded over the course of the year will be the most important aspect of the investor day; PRGO remains a long

Gaming, Lodging & Leisure: Todd Jordan - 00:04:38

• Moving Down to Long Bench – Marriott Vacations Worldwide Corporation (VAC): Took off best idea long list; Q4 was not all that impressive; with Quad 4, we need strong positive catalysts, and we don’t see that with VAC; still like the long-term business; VAC is now on the long bench
• Hotel REITs: Corporate airline bookings continue to stagnate at numbers that are well below 2019 levels; continue to be a thorn in the side of the hotel REITs; continue to like Park Hotels & Resorts Inc. (PK), Pebblebrook Hotel Trust (PEB), Xenia Hotels & Resorts, Inc. (XHR) on the short side   

Retail: Brian McGough - 00:06:24

• Moving Down to Short Bench – Wayfair Inc. (W): Taking off best idea short list; have been short for a year and a half; stock imploded last week in spectacular fashion; put up a miserable top-line number; just because they are laying off employees doesn’t mean they will be a profitable company; W is now on the short bench
• Short – Target Corporation (TGT): Important earnings release tomorrow; already a negative read out of Walmart; Target already missed 3 times last year; still see downside here; do have a macro aware management team but we think their macro forecast is wrong; we think they will guide down for the year; TGT remains a short
• Shorts – The Home Depot, Inc. (HD) & Lowe's Companies, Inc. (LOW): Elevated both on our best idea short list; we already saw Home Depot crack, Lowe’s comes out with numbers tomorrow; Street already pricing in that Lowe’s will put in a down comp; more risk for HD on the gross margin line; we think these shorts will outlive Quad 4; HD & LOW remain shorts  

Healthcare: Tom Tobin - 00:16:34

• Estimates: Have been sloping positive week on week; the long list continues to grow

Healthcare Policy: Emily Evans - 00:18:31

• Pfizer Inc. (PFE): Pfizer in talks to buy Seagen; $30 billion is the rumored price

Macro, Housing & Financials: Josh Steiner - 00:22:20

• American Car Center: Went out of business last week; happened really quickly; $220 million ABS issue into the market earlier last week; IG tranche of the issue was well-subscribed but zero interest in junior tranches; over 40 dealerships with several hundred employees; focus was on sub-prime auto finance

REITs: Rob Simone - 00:33:45

• Short – Medical Properties Trust, Inc. (MPW): Steward was found by the Court of Malta to have committed fraud on Friday and may have acted criminally; Steward has a 99-year concession to manage the only 3 hospitals in Malta; MPW has a ~$231 million UPB loan outstanding to the Int'l JV and owns a 49% equity stake in the entity; we believe MPW's investment should be impaired; MPW remains a short

Industrials: Jay Van Sciver - 00:41:43

• Transports: Sliding FedEx Corporation (FDX) down the long list; capacity in air cargo coming out a bit more slowly than we anticipated; adding Old Dominion Freight Line, Inc. (ODFL) to the short bench, have seen some abnormal volume growth; will also take a look at the rails, one of the most out of favor subsectors in the Industrials sector

Technology: Ami Joseph - 00:48:30

• A.I. Speaker Call: Hosting our A.I. Speaker Call with Jared Hillam today at 10am ET

China: Felix Wang - 00:55:03

• Removing from Best Idea Short – Sea Limited (SE): Covering short; important KPI pivoted positive for the first time since we went short in December 2021; SE has caught some lucky breaks this year in terms of development; longer term this is a broken company with broken brands; stepping to the sidelines for now

Telecom-Media Policy: Paul Glenchur - 00:57:03

• Meta Platforms/Federal Trade Commission: FTC dropped its antitrust case against Meta platforms; federal court didn’t grant a preliminary injunction
• Supreme Court: Hosting our call today on the Supreme Court targeting big tech & student loan forgiveness at 11am ET [Dial-In Only]

Macro Policy: JT Taylor - 00:58:53

• Friday, March 3, 2023 at 10:00 AM ET – CryptoCapitol Fireside Chat with Kristin Smith of the Blockchain Association

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