CALL INVITE -> Short HELE; Still 50% Downside Risk

The HELE short, which we added in late 2022, has been good on relative performance—significantly underperforming the XRT and the S&P—but the absolute downside is still to come.  Although the stock has held in despite ugly top line performance, we think risks are building for the earnings profile of HELE between key retail partners looking to drive value to the consumer (cut price), inflation applying further pressure on the middle-income consumer spending capacity (where majority of HELE brands play), ocean freight costs rising, and tariff risk (HELE has high China sourcing). This company plays the M&A rollup model, milking brands for margin until they decline into oblivion, then buys the next asset.  That game comes to an end in a higher rate environment with earnings under pressure.  This is like HanesBrands circa 2016, Newell circa 2013, and Jones Apparel Group roughly 20 yrs ago. During our Black Book next Tuesday, we’ll walk through the business drivers and full short thesis and ultimately review how we get to 50% downside risk for HELE from here.