prev

Chart Of The Week: "The Wreck Of The Edmund Fitzgerald"

"The legend lives on from the Chippewa on down
Of the big lake they call Gitche Gumee
The lake, it is said, never gives up her dead
When the skies of November turn gloomy."

I have a family home up on "The Lake" (Lake Superior). Gordon Lightfoot's lyrics should have been played for levered long US “Activist” Equity investors, where November did indeed "turn gloomy." That said, don’t let your broker or PM tell you “T’was the witch of November” who stole all performance. For the month, China and Gold closed +8.8% and +12.7%, respectively. Staying focused on your losers and averaging down on the homeland isn't going to differentiate returns in this increasingly interconnected global market of factors. Keep it global and keep moving!

We remain long both China and Gold via the FXI and GLD exchange traded funds. We are short the S&P500 via the SPY.
KM

TRADE VS TREND


KEITH - WEN is the best looking fast food stock on the long side… however…..

HOWARD – WEN - The however is due to management proving that the merger makes sense and that the margin opportunities at the Wendy’s brand are real. In 3Q05 The Wendy’s brand posted strong same-stores sales in 3Q08 on the back of the $0.99 menu. It’s a start!

KEITH - YUM starting to shape up long... has a lot of work to do, but looks better than it has in a while

HOWARD – YUM – We need to get past the 4Q08 – the quarter is not looking good. YUM’s U.S. business is in a secular decline and China is slowing versus a very difficult comparison last year.

A smoldering stimulant!

I know there are a number of factors influencing how people spend money in today’s economic environment, but current trend in gas prices will have a positive influence on consumer sentiment. As you can see from the national gas price map, the regions of the country with the lowest gas prices are those hardest hit by the current economic environment.

investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

US Market Performance: Week Ended 11/28/08

Index Performance:

The 5 Day Squeeze:
DJ +16.9%, SP500 +19.1%, Nasdaq +17.0%, Russell2000 +22.8%

November 08A:
DJ (5.3%), SP500 (7.5%), Nasdaq (10.8%), Russell2000 (12.0%)

Q408’ To Date:
DJ (18.6%), SP500 (23.2%), Nasdaq (26.6%), Russell2000 (30.4%)

2008 YTD:
DJ (33.4%), SP500 (39.0%), Nasdaq (42.1%), Russell2000 (38.2%)

WHEN INSIDER BUYING IS NOT A GOOD SIGNAL

It’s rare that insider buying is not a good sign. BYD insiders have been buying which I do think is a good signal to investors. BYD management has bought and sold well and the two key individuals there are buying (BB&BB), Bill Boyd and Bob Boughner.

The ASCA situation is a bit different. It’s no secret that that Ray Nielsen and the Craig Nielsen Trust would probably like to sell the company. This has been the investment thesis for quite awhile. Unless management wants to spend their retirement years in jail, there probably isn’t a deal in the works over the near term. Now that’s a signal, although probably not the one investors were looking for.

Next, let’s take a look at how management has done historically on its own stock. The results there are certainly not as good as BYD. The chart below shows the recent buying and it’s pretty obvious that management should stick to running casinos, which they actually do very well.


China: Jump on the positive "Trend"

If you missed the party bus, it doesn’t mean you have to miss the party. China’s FXI gave us a +12% move on Wednesday.

Our China long intermediate "Trend" was further supported yesterday with the announcement from China’s State Council of increased efforts to encourage enterprises to upgrade technology and engage in independent innovation. Key industries such as steel, auto, ship manufacturing, petrochemical, light industry, textile, nonferrous metals, equipment manufacturing, and information technology were highlighted by the Council.

Again, this is very proactive policy coming from the Chinese. In the last days China announced that they are cutting taxes, slashing interest rates, and issuing a $586B stimulus package. With high single-digit GDP growth combined with low single-digit inflation in 2009, China’s ETF (FXI) is a buy.

Matthew Hedrick
Analyst

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.64%
  • SHORT SIGNALS 78.61%
next