THE HBM: YUM, GMCR, RRGB, CBRL

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Gas Prices

 

According to the most recent American Pulse survey, even though gas prices have been rising for some time, the recent increase is not welcome and consumers are having to adjust their spending habits.  The survey suggests that 73.7% of Adults 18+ somewhat or strongly disagree with the statement, “I have become used to high gas prices and paying more than $4/gallon would not impact by spending in other areas.”


THE HBM: YUM, GMCR, RRGB, CBRL - gas prices chart

 

Commentary from CEO Keith McCullough

 

"While VIX 14 has been drawing people into buying high since the first week of March, this is not new – VIX 14, going back to 2008, is one of the most relevant sell signals (gross long equity exposure to beta) we can keep highlighting.

 

From a Sector perspective, Energy was the first Sector to snap its intermediate-term TREND line (today). Energy looks nothing like Apple - the Sector peaked on Feb 24thand has since had a -6.6% draw-down. Basic Materials (XLB) and Industrials (XLI) are broken from an immediate-term TRADE perspective, but those signals are less worrisome than broken TRADE and TREND (Energy).

 

This is a very pro-cyclical group of sectors Breaking down in unison, and it makes sense to us given that Global Growth has been slowing for at least a month."   

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: YUM, GMCR, RRGB, CBRL - subsector

 

 

QUICK SERVICE

 

YUM: Yum filed an 8-K with the SEC detailing a new $1.3 billion credit deal.  The new facility carries interest rates of LIBOR plus 1-1.75%.

 

GMCR: New allegations of fraud are emerging against Green Mountain in the form of an amended class action lawsuit alleging violations of various federal securities laws.

 

KKD: Krispy Kreme announced a buyback equal in magnitude to roughly 4% of the market cap.

 

 

CASUAL DINING

 

CBRL: Cracker Barrel shareholder Sardar Biglari increased his stake in the company by ~27k shares on 3/23, according to SEC filings.

 

RRGB: Red Robin Gourmet Burger was rated New Buy at DA Davidson.  The PT is $46.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

RRGB: Red Robin gained on accelerating volume on the DA Davidson upgrade.

 

THE HBM: YUM, GMCR, RRGB, CBRL - stocks1

THE HBM: YUM, GMCR, RRGB, CBRL - stocks2

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst