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Today: Expert Call with William W. Keep on Pyramid Schemes and the Multi-Level Marketing Industry

The Hedgeye Consumer Staples team, led by Rob Campagnino, will be hosting an expert call featuring William W. Keep TODAY at 1:00pm EST entitled "Pyramid Schemes and Multi-Level Marketing."

 

CALL DETAILS

  • Date: Monday, March 25th at 1:00pm EST
  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 587456#
  • Additional reading materials: CLICK HERE

 

TOPICS WILL INCLUDE 

  • What is Multi-Level Marketing (MLM) and where does it come from?
  • What are the key factors that determine a pyramid scheme versus a legitimate MLM company?
  • Framing the industry's learnings from such pyramid schemes as Equinox, Burn Lounge and Fortune Hi-Tech Marketing
  • Discussion of the FTC's role in the industry
  • Contextualizing Herbalife moving forward

 

ABOUT WILLIAM W. KEEP   

 

Keep is a professor of marketing at The College of New Jersey and currently serves as Dean of the school. His research and writings -- published in the Journal of Marketing, the Journal of Public Policy and Marketing, the Journal of Business Ethics, and The Chronicle of Higher Education, among others -- focus on long-term business relationships, business ethics, public policy and higher education. As a consultant he worked with a variety of firms and served as an expert witness in the prosecution of pyramid schemes, including Security Exchange Commission (SEC) v. International Heritage Inc., at the time the largest pyramid scheme ever prosecuted by the SEC. Keep has appeared on CNBC to discuss the topic of pyramid schemes, the MLM industry, and Herbalife and published articles on the subjects for CNBC and Seeking Alpha.

 

Professor Keep holds a PhD in Marketing from the Eli Broad College of Business at Michigan State University (MSU) and a B.A. from James Madison College at MSU in social science and economics.

 

 

CONTACT

Please email to obtain the dial-in information for this call and a copy of the presentation, or to learn more about our research.

 

 

ABOUT ROB CAMPAGNINO

Rob has nearly 20 years experience in the industry and within the last 5 years on the buy side at some of the top hedge funds in the business, including Pioneerpath, Diamondback Capital, and Searock Capital. Prior, he was a senior equity analyst at Prudential Securities where he was consistently Institutional Investor ranked. Before Prudential he was at Sanford Bernstein as an equity research associate covering food, beverage, and retail. He began his career as a strategic consultant with PricewaterhouseCoopers. Rob has a MBA from Columbia and BA in Economics from Duke.

 

ABOUT HEDGEYE

Hedgeye Risk Management is a leading independent provider of real-time investment research. Focused exclusively on generating and delivering actionable investment ideas, the firm combines quantitative, bottom-up and macro analysis with an emphasis on timing. The Hedgeye team features some of the world's most regarded research analysts - united around a vision of independent, uncompromised real-time investment research as a service.


Footwear: Market Share By Numbers

Takeaway: Here’s who’s gaining share, who’s losing it, and who barely has its head above water.

This note was originally published March 19, 2013 at 20:56 in Retail

Here’s a review of who’s gaining share, who’s losing it, and who barely has their head above water. Hint: a) Nike, b) AdiBok, c) Unde rArmour

 

Here’s an overview of market share winners and losers, based on NPD’s monthly market share data:

 

a)      Nike Brand market share is parabolic. Brand Jordan and Converse are both healthy, but stable.

 

b)      AdiBok is a train wreck – both sides of the house. It’s a good thing that the brands have better allure outside the US.

 

c)      UnderArmour is barely UnderWater. The general trajectory of its market share change is positive, but still unable to sustain share above 1% of the US market.

 

d)      Puma is in a death spiral.

 

e)      New Balance continues to grind higher in regaining its position as one of the top five brands. Its share now exceeds Reebok and equals Adidas.

 

Nike Brand Market Share

Footwear: Market Share By Numbers - nikebrandmarketshare

Source: NPD

 

Brand Jordan Market Share

Footwear: Market Share By Numbers - brandjordanshare

Source: NPD

 

Converse Market Share

Footwear: Market Share By Numbers - conversemarketshare

Source: NPD

 

Adidas Brand Market Share

Footwear: Market Share By Numbers - adidasmarketshare

Source: NPD

 

Reebok Market Share

Footwear: Market Share By Numbers - reebokmarketshare

Source: NPD

 

UnderArmour Market Share

Footwear: Market Share By Numbers - underarmourmarketshare

Source: NPD

 

New Balance Market Share

Footwear: Market Share By Numbers - newbalancemarketshare

Source: NPD

 

Puma Market Share

Footwear: Market Share By Numbers - pumamarketshare

Source: NPD


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


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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – March 20, 2013


As we look at today's setup for the S&P 500, the range is 27 points or 0.67% downside to 1538 and 1.08% upside to 1565.            

                                                                                                                   

SECTOR AND GLOBAL PERFORMANCE


THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EQUITY SENTIMENT:


THE HEDGEYE DAILY OUTLOOK - 10


CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.69 from 1.66
  • VIX  closed at 14.39 1 day percent change of 7.71%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, March 15 (prior -4.7%)
  • 10:30am: DOE Energy Inventories
  • 2pm: FOMC announces rate decision, releases summary of economic projections
  • 2:30pm: Fed Chairman Ben Bernanke holds news conference

GOVERNMENT:

    • Obama’s first visit to Israel; 3-day trip includes mtgs, news conferences with Palestinian Authority President Mahmoud Abbas, Jordanian King Abdullah II in Amman
    • 10am: Sen. Judiciary Cmte hold hearing on domestic drones, law enforcement, privacy issues
    • 11am: Interior Dept opens bids to lease 38.6m acres off coasts of La., Miss., Ala., for exploration that may tap 1b barrels of oil, 4t cubic feet of natural gas
    • 2:30pm: FAA Admin. Michael Huerta, NTSB Chairman Debbie Hersman testify at Senate Commerce Cmte hearing on FAA’s safety initiatives and the effect of sequestration
    • 3pm: Japan Intl Transport Inst forum on vehicle safety w/ speakers from NHTSA, Japanese regulator and Toyota

WHAT TO WATCH

  • Bernanke seen keeping QE pace until 4Q as Fed meets
  • Freddie Mac sues BofA, UBS, JPMorgan for alleged Libor rigging
  • Europe weighs Cyprus’s fate after lawmakers reject bank levy
  • BlackRock’s CEO Fink says Cyprus is not major problem
  • HP holds annual meeting amid dismay over Autonomy purchase
  • Apple may face sanctions in privacy suit over document sharing
  • Hostess wins approval of asset sales of more than $800m
  • MF Global trustee reaches agreement with JPMorgan
  • Chesapeake trial over $1.3b bond call set for April 23
  • Wall Street may win swap-rule reprieve in House legislation
  • Vodafone said to be ready to accept lower debt rating on M&A
  • Yahoo may buy stake in France Telecom’s Dailymotion: WSJ
  • Norwegian Air plans follow-on order for stricken Boeing 787
  • Transocean “should have done more” before blowout, CEO says
  • Los Angeles to halt purchases of coal-generated electric power

EARNINGS:

    • Lennar (LEN) 6am, $0.16 - Preview
    • General Mills (GIS) 6:59am, $0.57
    • FedEx (FDX) 7:30am, $1.38 - Preview
    • Actuant (ATU) 7:30am, $0.37
    • Herman Miller (MLHR) 4pm, $0.28
    • Oracle (ORCL) 4:01pm, $0.66
    • Tumi (TUMI) 4:01pm, $0.26
    • Guess (GES) 4:03pm, $0.87
    • Jabil Circuit (JBL) 4:30pm, $0.54
    • Clarcor (CLC) After-mkt, $0.46

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • WTI Crude Oil Rebounds in New York After Biggest Drop in a Month
  • Arabica’s Allure Returning for Roasters After Rout: Commodities
  • Gold Trades Below Three-Week High as Investors Weigh Cyprus, Fed
  • Gold Falls From Three-Week High as Investors Weigh Fed, Cyprus
  • Wheat Gains on Signs of Increasing Demand, U.S. Weather Concerns
  • Biggest Exporter Australia Increases Iron Ore Forecast on China
  • European Council Votes to End Sugar Quotas in 2017, EU Says
  • Physical Lead Market Seen by Macquarie Under Downward Pressure
  • Rebar Rises for Second Day as Moving Average Signals Rebound
  • Milk Jumps to Record on New Zealand’s Worst Drought in Decades
  • Russia, Egypt Yet to Contribute to AMIS Farm-Commodity Database
  • Wheat Buying by Bangladesh to Climb as Price Drop Boosts Demand
  • Olam Shares Top Level Last Reached Before Carson Block Attacked
  • Arabica Coffee Gains as Roasters May Switch Blends; Sugar Rises          

THE HEDGEYE DAILY OUTLOOK - 5

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 6

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 


American Progress

This note was originally published at 8am on March 06, 2013 for Hedgeye subscribers.

“He gave the nation the idea of American progress.”

-John Meacham

 

That’s what John Meacham wrote about Thomas Jefferson in his prologue to the latest brick I tackled on a flight yesterday to San Francisco, California: Thomas Jefferson: The Art of Power.

 

To his friends, who were numerous and devoted, Jefferson was among the greatest men who ever lived… to his foes, who were numerous and prolific, Jefferson was an atheist and a fanatic, a demagogue and a dreamer.” (Prologue xxiii)

 

Do you have a vision for your family and firm? Are you a dreamer? I am. And I’m damn proud of it too. Listening to politicians who don’t get liberty, free markets, and the purchasing power of success (#StrongDollar) has run its course. It’s a cycle. And so is American Progress.

 

Back to the Global Macro Grind

 

At this point, the sequential progress in the US Economic data from December 2012 to March 2013 is glaringly obvious. When my signals tell me to, I have no problem fighting the Fed. But I don’t fight the data.

 

From US Housing to Employment (they progressed first), to more coincident economic indicators like yesterday’s ISM Services report (best since 2011), the risk management question now isn’t “where do I sell?” It’s “could growth stabilizing become #GrowthAccelerating?”

 

We analyze a lot of “stuff”, but some of the more forward looking “stuff” comes in the form of new order growth:

  1. ISM Manufacturing New Orders accelerated from 53.3 in JAN to 57.8 in FEB
  2. ISM Services New Orders accelerated from 54.4 in JAN to 58.2 in FEB
  3. PMI Manufacturing New Orders accelerated from 58.2 in JAN to 60.2 in FEB

So, if you use that “stuff” (otherwise known as economic data), you’d answer yes to the question of recent American Progress. But these are new orders, what about new consumption growth tailwinds that we didn’t have in JAN or FEB?

 

How about Oil prices coming down? Amidst all of the #PoliticalClass fear-mongering about the spending problem they created, could Sequestration = Strong Dollar = Down Oil = Stronger real (inflation adjusted) Consumption Growth?

 

I’m no atheist, and my loathers can call me fanatic about this Strong Dollar Tax Cut idea all they want, but history sides with the Canadian on this front, bros. As you can see in today’s Chart of The Day, under both Reagan (1983-1989) and Clinton (1993-1999), American Progress was built on the back of a Strong Dollar, pro growth, recovery.

 

How does Mr Market score our theme of being long Consumption?

  1. US Healthcare Stocks (very much an American Consumption story) = +11.33% YTD (XLV)
  2. US Consumer Staples Stocks = +10.72% YTD (XLP)
  3. US Consumer Discretionary Stocks = +9.66% YTD (XLY)

Yes. All of those are beating what’s been a fantastic +7.9% YTD return for the SP500. And how does Mr Market score being short (or underweight) Commodity Inflation Expectations?

  1. US Basic Materials Stocks = +3.41% YTD (XLB is the worst performing Sector in the S&P Sector Model)
  2. CRB Index (19 commodities) = -1.35% YTD (awful relative to any major asset class)
  3. WTI Crude Oil = -1.4% YTD (having recently broke our $93.79/barrel TREND line of support)

OK. So being long Consumption growth and short Commodity exposures is still working. How is the end of the world trade going?

  1. Gold = down again this morning to $1574, = down -6.02% YTD
  2. US Treasuries = 10yr Yield up to 1.92% this morning = up +9.09% YTD

Again, if the world was going to end: A) all US economic data wouldn’t have gone from slowing to stabilizing to accelerating (look at the slope of the line) and B) Gold and Treasuries wouldn’t be losing you money in 2013 YTD.

 

I know, I know. People want to bring up what happened last year, and the year before that. I know, it’s like arguing with my college girlfriend. It was painful. But I got over it.

 

I don’t live a regressive life. I’m writing about American Progress because we have a tremendous opportunity here. What’s not only been happening for 3 months, but what could keep happening if the #StrongDollar setup remains excites me. It should excite you too.

 

Look at your screens. Markets are testing all-time highs. Be a leader. Be proud. Cut government spending. Get these people you already have on mute off TV. Let’s get back to what makes this country the most progressive that the world has ever seen. This is our chance.

 

Our immediate-term Risk Ranges for Gold, Oil (WTIC), US Dollar, USD/YEN, UST 10yr Yield, VIX, Russell2000 and the SP500 are now $1549-1584, $89.76-91.98, $81.76-82.38, 91.79-94.68, 12.21-14.63, 910-932, and 1519-1543, respectively.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

American Progress - Chart of the Day

 

American Progress - Virtual Portfolio



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