When we initiated coverage of the consumer staples sector a couple of weeks back, we highlighted two "broken" growth stories as being interesting - MJN (+5.9% since 12/17) and MNST (-1.4%). Admittedly, MJN's market share and pricing issues in China were easier to get comfort with versus the more open-ended spectre of the possible regulation of energy drinks, but we see the outcomes as ultimately being the same - investors will go back to paying a premium multiple for the underlying growth profile in both stories.
It is our belief that the FDA has as much business regulating energy drinks as we do - which is to say, right around no business at all. And while the timing of a likely favorable outcome is unclear, we believe that investors will be rewarded for picking their spots in this name, as we did today.
HEDGEYE RISK MANAGEMENT, LLC