Transparency, Accountability and Trust

Client Talking Points

Real Conviction

Transparency, accountability and trust – those are the key tenets of how we approach things here at Hedgeye. We have been bullish on US equities, and we have time-stamped our positions and have been completely open and transparent about them. So, yesterday, when the rest of the world was calling for the end of the world and wrung their hands over a three-day losing streak, we did what we said we would do: we bought the SPY. That’s who we are and that’s what we do.

Other Markets Aren’t Worried, Either

The German Dax moved up another 0.8% last night, and is closing in on a five-year high. Meanwhile, the Shanghai Composite ripped 2.7% higher. So, it’s not the end of the world. But, if you feel the need to short, then short Europe. Just make sure you’re shorting the right markets like Italy, Russia and France in our opinion.

Asset Allocation

CASH 26% US EQUITIES 30%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 24%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“You are either right or wrong in this business – humility is in being accountable to both.” -- @KeithMcCullough

QUOTE OF THE DAY

“Don’t cry because it’s over. Smile because it happened.” – Dr. Seuss

STAT OF THE DAY

8, the seed of Robert Morris in the NIT college basketball tournament, who upset Kentucky last night