The Call @ Hedgeye | Friday, February 24, 2023 [REPLAY]

Watch THE REPLAY Below

TICKERS DISCUSSED LONGS: RHP, VVV, UHS, ACHC  SHORTS: SG, BYND, RVLV, FND, CM, MPW OTHERS: BABA

BROADCAST SUMMARY

Restaurants: Howard Penney - 00:00:42

• Short – Sweetgreen, Inc. (SG): Lowered guidance which is not surprising; starting to come into reality about their business; structurally unprofitable; SG remains a short
• Short – Beyond Meat, Inc. (BYND): Rallying today; company has not met guidance since they’ve come public; they are not restructuring to become a growth model; they are restructuring to avoid going bankrupt; BYND remains a short

Consumer Staples: Daniel Biolsi – 00:05:26

• Grocery Inflation: Food at home CPI increased 11.3% YOY in January, but inflation differed by retail channel according to Numerator; for the past year the dollar store channel has led retail channels in inflation; in the four-week period ended February 5 the dollar store channel had inflation of 17.5% YOY; in comparison, the club store channel had the lowest rate of inflation at 7.8%

Gaming, Lodging & Leisure: Todd Jordan – 00:08:40

• Long – Ryman Hospitality Properties, Inc. (RHP): Another outstanding quarter and guidance; continues to differentiate itself from the rest of the hotel REIT complex; beat consensus EBTIDA by 8%; beat was both in lodging and entertainment segments; on a path to generate market share; RHP remains a long  

Retail: Brian McGough and Jeremy McLean - 00:15:53

• Short – Revolve Group, Inc. (RVLV): Put out numbers last night; Street was at 10 cents; company came in at 11 cents; stock almost immediately squeezed up; top-line came in at 8% relative to what the company guided to; stock is now close to being flat; Pod 1 is slowing; gross margins decelerated too; most KPIs look terrible; RVLV remains a short
• Long – Valvoline, Inc. (VVV): Caught a downgrade this morning; one of the few names that we would be buying in the retail space; going to separate two businesses over the next 2-3 months; will use proceeds to buy back stock; Valvoline Instant Oil Change will trade on its own; VVV remains a long
• Short – Floor & Decor Holdings, Inc. (FND): Reported last night; quarter beat by 12%; transactions down 10.4%; QTD comps have slowed; stock is up moderately in the pre-market; numbers have come down a lot since we went short in October; management team’s outlook is too bullish; our analysis suggests demand will get worse; FND remains a short  

Healthcare: Tom Tobin – 00:24:43

• Longs – Universal Health Services, Inc. (UHS) and Acadia Healthcare Company, Inc. (ACHC): Both reporting on Monday; we’ve been tracking hospital occupancy data; UHS showing good in-patient occupancy numbers so far this quarter and to end Q4; probability for upside is high; recipe for margin expansion; on Acadia, down wages with aggregate hours up; more patients being seen at a lower cost; UHS & ACHC remain longs

Healthcare Policy: Emily Evans – 00:28:54

• PCE: Healthcare inflation didn’t really begin until October of last year; inflation is expressed through a restriction of care; January is a big month for healthcare inflation because this is when a lot of plans re-set

Macro, Housing & Financials: Drago Malesevic  - 00:31:11

• Short – Canadian Imperial Bank of Commerce (CM): Canadian bank earnings kick off today; CIBC led the way, posted EPS of $1.94 which is down 5% YoY; net interest income came in below expectations; not a high-quality beat; consumer banking loan book grew 8% YoY; very little talk of cash flow pressures; CM remains a short

REITs: Rob Simone – 00:37:36

• Short – Medical Properties Trust, Inc. (MPW): Reported their quarter; wheels falling off the bus at this point; probability of this being a bad ending is going up more quickly now; Utah hospital is Steward’s most profitable hospital; Steward is selling this hospital to raise capital; MPW remains a short

Industrials: Jay Van Sciver – 00:44:06

• Long – MP Materials Corp. (MP): Did well vs consensus; reported 42 cents vs 17 cents expected; sales came in ahead; one of the few SPACs that beat their initial forecasts from their SPAC deck; going to start processing domestically (Stage II) which is underway; MP is a huge beneficiary of IRA subsidies; MP remains a long    

China: Felix Wang - 00:52:01

• Alibaba Group Holding Limited (BABA): Up 6% pre-market when they released their earnings report; ended the day down 1%; no questions on the call from bullish analysts on international segment

Telecom-Media Policy: Paul Glenchur – 00:55:06

• SCOTUS: Hosting a call on Monday going over Supreme Court agenda and some of the activity on The Hill; will cover fallout from social media cases; we are in the last 4 months of the Supreme Court term; will touch on Biden student debt cancelation program  

Macro Policy: JT Taylor – 00:55:59  

• Ukraine: Entering year 2 of the war in Ukraine; no end in sight; looks like Putin is planning for a war of attrition; new round of sanctions working to varying degrees; large coalition including NATO countries and others providing arms to Ukraine; China’s involvement is a game changer, one of the more concerning factors; still mixed signals in Washington; $113 billion has been spent by the U.S. on the war in Ukraine

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