Keith shorted MCD in the Hedgeye Virtual Portfolio.
We have been bearish on McDonalds for some time now and published a contrarian Black Book detailing our thesis in mid-January. MCD’s core business is in decline and the first chart, below, shows where January’s comparable restaurant sales came in versus expectations. Our estimates for the rest of the year are also detailed in the chart; clearly we have a pessimistic outlook for the U.S. business which represents approximately 46% of the company’s operating profit.
The second chart details the quantitative set up for MCD at its current level. The Hedgeye Risk Management quantitative set up shows the nearest intermediate-term support down at $74.12.