• The call plus


    The Call @ Hedgeye Plus

    Our favorite, high-conviction stock ideas and CEO Keith McCullough’s Macro overlay. Exclusively on Hedgeye TV.


Here’s the latest intersection between Keith’s factor models, and my fundamental models. Combining the two has improved our team’s batting average. Lots of opportunity out there…

KEITH: GES lined up to be knocked down again. From here to 25.96 it’s a short. Any catalysts?
BRIAN: Yes. When the company comes out with earnings in another month, it will take down numbers.

KEITH: LIZ has a lot of work to do, but if it can hold 7.32, it has a prayer.
BRIAN: A lot of work to do indeed. But we’re going to start to see more of that work payoff over the next 2 quarters. The P&L is a mess, but people are looking through capex and sg&a cuts. Cash trajectory looks good to me.

KEITH: SKX failed right where it should have (13.48); it will see $11, soon, if the fundamental river card shows.
BRIAN: Let me be clear on this one… I think margins are going close to zero. But I’m not sure we’ll see Keith’s fundamental river card before year end.

BRIAN: My gut (and my math) gets me to a beat on the quarter, and if there is a guide down, it should not be by much. For a global power brand like RL that is coming off a period of investing in both its P&L and balance sheet while many competitors have been doing the opposite, I like its competitive positioning at 6x EBITDA.
KEITH: Stock was a buy at 38 on the prospect of a beat on the Q… not at 48.
Editor’s (Brian’s) Note: The key factor here in our differing view is duration mismatch.

KEITH: COLM holding 35.76 looks like a long.
BRIAN: I agree on the fundamentals here. Not rosy by any means, especially with Spring backlog so weak. But COLM is 3-quarters into a period of SG&A investment that I have been waiting for five years to see. The company is finally investing in its content. Don’t underestimate how that could reverse the trajectory of a flailing top line.

KEITH: CROX has 29% of the shares held short, and is now a long provided it can hold 2.48. Up another 26% Tuesday. Someone knows something …
BRIAN: If someone knows something imminent, it’s not me. Imminently, earnings/cash flow is a black hole. CROX should have reported yesterday, but they have not even announced their reporting date. Fundamentally, I like the idea of a take-out. Enterprise value of $232mm, and regardless of the ‘fad-factor’ of its core product, I think Crocs is a brand, not a product. Someone larger will own this company within a year. My bet rests with Skechers, which can buy CROX with its cash on hand. The duration of a call on this one is the biggest question in my mind.