Reducing our exposure to China
We are taking Tim Hortons China (THCH) and Yum China (YUMC), and YUM off the Long Bias list. – The Hedgeye Nowcast Model nailed China re-entering #Quad4 in the last three months with the Manufacturing (PMI #slowed to 48.8 in May) and Services sides of the economy #slowing. We will wait for a more favorable macro setup to go long these names.
BROS
BROS is a best Idea SHORT and the company will be hitting the conference circuit in April.
While BROS is not a "comp" story, the company will likely be messaging better comps during the early part of 2Q23, given its momentum at the end of 1Q23 on the back of some aggressive discounting. The better comps in 2Q23 is a net positive but new store productivity, which was a significant "red flag" in 1Q23 is still the biggest issue the company faces. It will be interesting to see how the company addresses this issue on the conference circuit.
The company will be at TD Cowen's on Tuesday, June 6, 2023, at 1:10 PM ET; Also Baird's 2023 Global Consumer, Technology & Services Conference in New York City on Wednesday, June 7, 2023, at 3:10 PM; then at William Blair's 43rd Annual Growth Stock Conference in Chicago on Thursday, June 8, 2023, beginning at 12:20 PM ET; lastly they will be at the Jefferies Consumer Conference in Nantucket on Tuesday, June 20, 2023, and Wednesday, June 21, 2023.
