The Call @ Hedgeye | Wednesday, February 22, 2023 [REPLAY]

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TICKERS DISCUSSED LONGS: WWW, TJX, DRVN, MP SHORTS: TAP, PEB, PK, TNL, GIL, EXAS, NXRT, TTD   OTHERS:  PSA, BIDU

Broadcast Summary

Consumer Staples: Daniel Biolsi – 00:01:46

• Short – Molson Coors Beverage Company (TAP): Molson Coors reported Q4 EPS of $1.30, above consensus expectations of $1.07; overall revenue grew 3.8% with volumes declining 6.9% and pricing of 11.4% plus a mix benefit; revenue per hectoliter increased 11.4% in the quarter while volumes declined 6.9%; seeing volumes fall off a cliff; not going to see price increases in the spring; TAP remains a short

Gaming, Lodging & Leisure: Todd Jordan – 00:06:56

• Short – Pebblebrook Hotel Trust (PEB): Preannounced already; OpEx increased throughout the quarter and doesn’t look good going forward; Q1 guidance was well below the Street; getting proceeds for insurance recovery which is in their guidance; PEB remains a short
• Short – Park Hotels & Resorts Inc. (PK): Beat estimates for Q4, however, guidance for Q1 and full year 2023 are below the Street; PK remains a short
• Short – Travel + Leisure Co. (TNL): Beat for Q4 but guidance for Q1 is below us and the Street; guidance for the full year is higher than the Street but we are putting more weight on the Q1 guidance; TNL remains a short

Retail: Brian McGough and Jeremy McLean - 00:12:25

• Long Bench – Wolverine World Wide, Inc. (WWW): Already put out a preannouncement and came in line with the preannouncement; cash flow looked decent; Pod 3 story (free cash flow); Pod 3 longs play out over the course of 2-3 years; WWW remains on the long bench
• Long – The TJX Companies, Inc. (TJX): In-line quarter; inventories ended the quarter down; should have inventories up; we think they should be more aggressive with excess inventory; we are negatively inclined on this print; TJX remains a long
• Short Bench – Gildan Activewear, Inc. (GIL): Revenue and EPS miss this morning; guiding to revenue up single digits; guidance is very puzzling; inventories up 58% with revenue down 8%; raw materials pressure; GIL remains on the short bench
• Long – Driven Brands Holdings Inc. (DRVN): Relatively in-line print; EBTIDA slightly ahead; comps up 11% but car washes proving to be much more discretionary; company has diverse exposure to auto maintenance services; still like this long side; DRVN remains a long

Healthcare: Tom Tobin – 00:21:23

• Short Bench – Exact Sciences Corporation (EXAS): Had a good quarter with good guidance; one thing they called out is that one of the reasons they had a strong quarter was the lack of labor within the GI suite; pushing more people to Cologuard; labor data continues to unwind; EXAS remains on the short bench

Macro, Housing & Financials: Drago Malesevic - 00:36:55

• Inflation: In the U.S. we have an insultation factor from households locking in all-time low rates during pandemic period; home equity lines of credit are re-priced with credit rates; in Canada, annual inflation rate slowed to 5.9% in January which is down 40 basis points from December; economy is highly levered to the housing market

REITs: Rob Simone – 00:32:16

• Moving Down to Short Bench – NexPoint Residential Trust, Inc. (NXRT): Things are getting worse at a slower rate; redeploying excess capital and selling assets; getting a little less bad on the margin; NXRT is now on the short bench  
• Public Storage (PSA): Reported last night; way worse than expectations; very clearly discounting; forward revenue outlook is way below the Street and where we are; negative read across for the entire space; going to see storage trade lower on this

Industrials: Jay Van Sciver – 00:36:30

• Mid-Quarter Update: Hosting our 1Q23 Mid-Quarter Themes Update on Thursday @ 2pm ET
• Long Bench – MP Materials Corp. (MP): Selling processed rare earths to Sumitomo in Japan; they will distribute in Japan for MP; this is a great spot for MP to move into; MP remains on the long bench

Communications: Andrew Freedman – 00:48:45

• Short – The Trade Desk, Inc. (TTD): Finally coming back to reality after squeeze last week; guided to Pod 1 and 2 deceleration; guiding to a 36% YoY decline in EBITDA in Q1; TTD remains a short
  

China: Felix Wang - 00:54:50

• Baidu, Inc. (BIDU): Baidu reported earnings; ChatGPT remains a hot topic and regulators are getting involved

Telecom-Media Policy: Paul Glenchur – 00:56:42

• Google: Based on yesterday's oral arguments, the Supreme Court will likely back the position of Google and other tech platforms, interpreting the online platform liability shield (Section 230 of the Communications Decency Act) to protect content recommendations and other organization and navigation tools that facilitate relevant content discovery by platform users; ultimately, we believe the Court is reluctant to expose platforms to liability for arranging and prioritizing content options, defending the curation tools essential to a manageable internet experience

Macro Policy: JT Taylor – 00:57:52  

• Russia: Biden and Putin both gave speeches yesterday; Russia is suspending participation in the New START Treaty which is the last remaining nuclear arms agreement between the U.S. and Russia; complicates arms control policy; set back to the U.S. in terms of getting China to the table to get them to be more transparent with what they are doing with their nuclear arsenal

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