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.
Robert Campagnino
Managing Director
HEDGEYE RISK MANAGEMENT, LLC