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Short BBEP - Call Invite

We added short BreitBurn Energy Partners L.P. (BBEP) to the Hedgeye "Best Ideas" list on Tuesday, July 2nd (email me for a copy of that note if you don't already have it) and will be holding a brief call on Tuesday, July 9th at 1:00pm EDTto walk through the thesis and answer any questions (send to ).

 

 

THESIS 


We believe that BBEP's distribution is largely a mirage, funded with capital raises that are disguised with a variety of creative, and perhaps unjustifiable, accounting techniques.  We estimate fair value for BBEP is between $2 - $8 /unit, ~70% below the current unit price of $15.47.

  

KEY ISSUES INCLUDE

  • Derivatives accounting
  • Aggressive adjustments to non-GAAP measures
  • Understated maintenance capex
  • Desperate leverage situation

 

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 973882#
  • Materials: CLICK HERE (slides will download one hour prior to the start of the call)

 

Kevin Kaiser

Senior Analyst

 


[Podcast] McCullough Nails It

Hedgeye CEO Keith McCullough nails the Big Macro call ... again. He gives his take on the June jobs report beat, spike in yields, plunge in Gold, #StrongDollar, emerging markets and more. Take a listen.

 


THE M3: SUNCITY

THE MACAU METRO MONITOR, JULY 5 2013

 

 

SUNCITY MONTHLY VIP GAMBLING VOLUME HITS MOP135 BLN Macau Business

VIP volume at Suncity Group Ltd reached a record 135 billion patacas (US$16.9 billion) last month according to an executive of the company.  Suncity is the “number one junket operation in Macau in terms of scale”, said Maggie Lei Siu Wai, the group’s vice president of human resources.  She added the company had interests in the profits of 250 gaming tables in 17 VIP rooms.

 

Lei added that the consolidation of different junket rooms under the management of a few big junket investors is “a general trend based on the limited human resources” of the city.  It’s likely it is also driven by business factors including the spread of credit risk and smoothing of trading volatility.  The more junket rooms, the more sub-agents recruiting players from China, the more players, the more cross-subsidy of the business and the greater the smoothing effect in the credit trading cycle, say industry sources.


DICJ said in March the city had 235 licensed junket operators – an increase of 7.3% YoY.  But a deceleration in growth rates for the VIP segment – against a background of a more challenging macroeconomic picture in mainland China and a new national political leadership apparently committed to reducing corruption and the volume and speed at which money passes through the city’s junket system – has in turn created tougher trading conditions for junkets.  That’s especially the case for smaller operations with only a few rooms and a small roster of players. 


investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

Jobs!

Client Talking Points

JAPAN

It was a big week for the #Weimar Nikkei (up +2.1% overnight, capping a +4.6% week overall) and a bad week for the Yen. Another better than bad US employment report will only fuel this FX/Equity correlation trade. So keep that in mind with no support for USD/YEN to $100.85.

EURO

A dovish European Central Bank was the reason for EUR/USD down and a wicked bounce off the tree line to keep European Equities from going out of bounds yesterday. The Euro is broken again (vs USD). Anything that puts upward pressure on anything USD is bearish for Gold and Silver. Both are down -1.2 and 3.2% again this morning after failing @Hedgeye TRADE resistance.

UST 10YR

I still think higher-lows and higher-highs for rates are in order as both the Fed and Fixed Income consensus are still too bearish on both US Employment #GrowthAccelerating and #RatesRising. If you ask the 10-year at 2.54% this morning, what’s in the envelope for this jobs report, it’s the same that’s been in the non-seasonally adjusted rolling Jobless Claims data for the last 4 weeks (better). Keep an eye on 2.64% which is next resistance.

Asset Allocation

CASH 56% US EQUITIES 16%
INTL EQUITIES 0% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 28%

Top Long Ideas

Company Ticker Sector Duration
WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.

MPEL

Gaming, Leisure & Lodging sector head Todd Jordan says Melco International Entertainment stands to benefit from a major new European casino rollout.  An MPEL controlling entity, Melco International Development, is eyeing participation in a US$1 billion gaming project in Barcelona.  The new project, to be called “BCN World,” will start with a single resort with 1,100 hotel beds, a casino, and a theater.  Longer term, the objective is for BCN World to have six resorts.  The first property is scheduled to open for business in 2016. 

HCA

Health Care sector head Tom Tobin has identified a number of tailwinds in the near and longer term that act as tailwinds to the hospital industry, and HCA in particular. This includes: Utilization, Maternity Trends as well as Pent-Up Demand and Acuity. The demographic shift towards more health care – driven by a gradually improving economy, improving employment trends, and accelerating new household formation and births – is a meaningful Macro factor and likely to lead to improving revenue and volume trends moving forward.  Near-term market mayhem should not hamper this  trend, even if it means slightly higher borrowing costs for hospitals down the road. 

Three for the Road

TWEET OF THE DAY

Higher rates and crashing Gold were pro-growth signals in 1982 inasmuch as they were again in 1993

@KeithMcCullough

QUOTE OF THE DAY

Successful people are always looking for opportunities to help others.  Unsuccessful people are always asking, “What’s in it for me?” – Brian Tracy

STAT OF THE DAY

500 years of YouTube video are watched every day on Facebook, and over 700 YouTube videos are shared on Twitter each minute. (ReelSEO.com)


July 5, 2013

July 5, 2013 - DTR

 

BULLISH TRENDS

July 5, 2013 - 10yr

July 5, 2013 - spx

July 5, 2013 - nik

July 5, 2013 - dxy

July 5, 2013 - oil

 

BEARISH TRENDS

July 5, 2013 - dax

July 5, 2013 - VIX

July 5, 2013 - euro

July 5, 2013 - yen

July 5, 2013 - natgas
July 5, 2013 - gold

July 5, 2013 - copper



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