SHFL reports its Q3 after the close today. The stock is acting like a major miss is imminent. SHFL priced its secondary offering on July 25th, right at the end of its fiscal quarter. After missing most of its quarters over the past couple of years, the company has a credibility issue. I find it hard to believe that management would punt on its first quarter out of gate following the secondary as they attempt to restore faith. With 16% of the float short, any number close to the $0.10 consensus estimate should result in some nice upside action. As I’ve written about, I have some serious longer term concerns but there are times to differentiate between a trade and trend.

SHFL management needs to restore credibility

Industry Gravity: Hedge Funds Cutting Fees...

Finally, the Wall Street Journal quantified what we have been talking about for the last 9 months in Jenny Strasburg's article this morning titled "Hedge Funds' Capital Idea: Cutting Fees."

I'll let you read the article, but this was inevitable. I have never seen an industry that is oversupplied NOT lose pricing power. At the end of the day, I learned a while ago when I built my own hedge fund, that the art of managing money, is having money to manage!

Winners and Losers continue to emerge. That's free market capitalism, and I'm all for it.

MCD: Same-store sales trends continue to surprise me

MCD posted another strong month of comparables sales, with August 2-year trends improving sequentially from July in every segment. U.S. same-store sales were up 4.5%. Despite the strong top-line trends, I continue to be concerned about U.S. restaurants margins (which have declined for the last 6 quarters) as the company drives increased traffic with its Dollar Menu, but the August number was impressive nonetheless.
  • August same-store sales grew 11.6% and 10% in Europe and APMEA, respectively. Even with this continued top-line momentum, one of my ongoing concerns stems from the company’s increasing foreign currency benefit, which will not be around forever. As I have said in the past, MCD Europe’s positive currency impact has grown rather steadily and has been beneficial to EBIT growth since 3Q06. Reported systemwide sales in Europe grew 21.5% in August, including an 8% currency benefit. This currency impact, although still significant, slowed from July when currency boosted systemwide sales growth by 13%. In APMEA, currency helped total sales growth by 6% in August (down from nearly 10% in July). Based on these results, MCD will still experience currency tailwinds in 3Q08, but we may have already seen the peak of the currency benefit.

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Julia Stewart’s acquisition of the Applebee’s chain will go down as one of the worst acquisition in the history of the Restaurant Industry. At the time of the acquisition the stock was $65, today its below $20 and going lower.

Today, DIN announced that resignation of Thomas G. Conforti, its Chief Financial Officer, effective immediately. In the press release, Julia Stewart went to praise him for his service to the firm. Yet, taking a closer look that the 8K shows that he was more likely fired and did not resign.

Item (d) in the separation agreement states that;
The Company shall make available to Executive for a period of up to 18 months following the Effective Date, at the Company’s expense, executive-level outplacement assistance benefits through Right Management or another outplacement firm of Executive’s choice, provided that such benefits shall be capped at $12,000.00 and will be paid by the Company directly to the provider.

In the normal course of resigning voluntarily from a job you don’t get out-placement services!

Swedish Fish, This Chart Is Not...

This is just another picture that reflects the massively relevant impact of global growth slowing in the face of a US Dollar appreciating.

Sweden’s economy is tied to commodities and global infrastructure – the WEF ranks them as the 4th most competitive economy. Yes, the Swedish Krona looks like it had quite a run alongside those 2 global investment "themes" since 2005 doesn't it!

Local CPI was reported today, a touch better than expectations. This stagflation tastes nothing like Swedish Fish.

VIX and S&P500 quant setups look ominous here...

In the immediate term, my models have the Volatility (VIX) level testing 24.77, and the S&P500 headed to 1230.54.

This is the immediate term "Trade" as I see it right now. Remember, my price models reset every 90 minutes. As the facts change, I will.
(picture courtesy of:
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