THE HEDGEYE BREAKFAST MONITOR
Hedgeye Restaurants Alpha – our best fundamental ideas
LONGS: SBUX, PFCB, EAT, YUM
SHORTS: DNKN, BWLD, WEN
RESTAURANT STOCKS IN THE HEDGEYE VIRTUAL PORTFOLIO
LONGS: PFCB, EAT, JACK, SBUX
SHORTS: MCD
MACRO NOTES
Commentary from CEO Keith McCullough
Oh how quickly the game changes when economic gravity is introduced:
- JAPAN – top question from clients is when does the sov debt crisis in Japan find its way into equities. Answer: after currencies. The Nikkei finally snapped its immediate-term TRADE line of 10,105 support last night, trading down a stiff -2.3%, taking its correction to -4% from its March high (to put the asymmetry of the SP500 in context, the US has only had 1 down day of more than -0.7% YTD).
- GERMANY – first immediate-term TRADE line break in the DAX too (line was 6998), and the correction in German Equities is now -3.8% from the YTD peak (so keep that in mind w/ the SP500 only -0.4% from its YTD no-volume high). German economic data, like the rest of the world’s, has slowed sequentially in the last 6 weeks.
- US DOLLAR – Bernanke’s Bubbles are vast. All we need to see is the confluence of UST yields rising alongside the USD and Gold will come down in a hurry. Intense selling in the last 48hrs in Gold and Silver. Bernanke’s War is on. Remember, we’re explicitly fighting the Fed having a 0% asset allocation to Commodities and Treasuries right now.
Watch 1407 on the SPX. That line breaks and 1388 is next support.
KM
SUBSECTOR PERFORMANCE
QUICK SERVICE
MCD: McDonald’s was removed from the Conviction Buy list at Goldman Sachs. It remains rated Buy.
BUX: Starbucks was added to the Conviction Buy list at Goldman Sachs.
BKC: Burger King is coming public again. Burger King will sell a 29% or $1.4 billion stake to Ackman via Justice Holdings, a UK investment vehicle. The company says its international growth plans will benefit from better visibility as a public company. It expects its shares to be relisted on the NYSE within 3 months.
THI: Tim Hortons was downgraded to Neutral from Buy at Goldman Sachs.
WEN: Wendy’s is meeting with lenders in New York tomorrow to discuss $1.325 billion in loans the company is seeking to refinance debt. The financing will include a $1.125 billion term loan B maturing in seven years and a $200 million revolving line of credit due in five years.
NOTABLE PERFORMANCE ON ACCELERATING VOLUME:
GMCR: Green Mountain declined 2.2% on accelerating volume.
CASUAL DINING
PFCB: P.F. Chang’s on Monday revealed its faster service, lower-priced Pei Wei Asian Market, a fast-casual spin-off of its 173-unit Pei Wei Asian Diner concept.
NOTABLE PERFORMANCE ON ACCELERATING VOLUME:
KONA: Kona Grill gained 7.1% on accelerating volume.
PFCB: P.F. Chang’s gained 2% on accelerating volume.
Howard Penney
Managing Director
Rory Green
Analyst
