Hedgeye CEO Keith McCullough is adding Omnicom Group (OMC) to the short side of Investing Ideas. Below is a brief note.
Today is the day when an experienced long/short pro raises some cash and/or puts on some shorts...
So why don't you do that and add back one of Communications analyst Andrew Freedman's best longer-term shorts: Omnicom Group (OMC).
Here's a reminder on the short call for those of you who don't subscribe to Freebird's excellent Communications Pro research product:
FROM FREEDMAN:
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OMC reported earnings this morning. As a reminder, we added the advertising agency holding companies to the top of the short bench last week and discussed during our themes call. The agency model is secularly challenged; plagued by in-sourcing, fee compression, high labor intensity and fierce competition. We believe relaxed remote work policies post-COVID will accelerate in-sourcing trends on the brand side. Additionally, while it seemed like a prudent move to lay off/furlough staff and institute pay cuts during COVID. In the long-term, it is quite possible the agencies accelerated their own demise. With economic activity roaring back, many agencies are understaffed – and we believe margins will come under pressure over the next 6-12 months as they have to ramp back hiring to meet demand (right into a slowdown in advertising spend) and likely have to pay higher wages (inflation) to attract/keep talent. |
Sell on green. Don't puke/panic on red,
KM