TSN and PPC: Stay Short The Chickens

We recently spoke with the "Chicken Man", David Harvey, who oversees the poultry data at the National Agricultural Statistics Service, who said that the total number of chickens currently slaughtered on average in the United States equals approximately one million birds an hour. "That’s one million every hour, day and night, every day of the year”...

Andrew Barber has charted US chicken production as a percentage of the total estimated US population since the US Depression as well as the per capita estimates that Dave and his team prepared (see charts below).

Tops are processes, not points. This top in per cap chicken consumption is a pending tsunami for TSN and PPC, who we continue to be negative on. While I covered our TSN short position on a big down move on Thursday, look for me to re-short it on strength. For PPC, which I re-shorted on strength on Friday, I'm looking for $10.01 next (26% lower from Friday’s close). There are some big concentrated holders on the PPC shareholder list that may not see the fundamentals here that we do. That’s what makes a market, so we’re looking forward to the debate. Concentration on a holders list like this is a massive liability when company fundamentals begin to structurally unwind. If you own Pilgrim’s Pride (PPC) today, you must think it’s cheap and washed out. We think you think it’s cheap because you are using the wrong numbers.

See charts, courtesy of Stockcharts.com, below. Our restaurant/food/beverage Partner, Howard Penney, remains negative on the chicken processors. See his Research Edge Portal for more.
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