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REPLAY: Q4 2013 MACRO THEMES CALL

Earlier today the Hedgeye Macro Team, led by CEO Keith McCullough, hosted their quarterly Macro Themes conference call in which they detailed their Top 3 Global Macro Investment themes for 4Q13.  The Replay and Presentation Materials can be accessed via the links below.

 

 

REPLAY:  CLICK HERE 
MATERIALS: CLICK HERE

Q4 THEMES:

1.  #BernankevsCongress: The biggest, current risk to forward growth domestically is not Congress, it's the prevailing policy position of the Fed.  The #StrongDollar + #RatesRising dynamic has backstopped our bullish U.S. growth call YTD and the acute risk here is that a perpetuation of unprecedentedly dovish monetary policy catalyzes a reversal in the strong dollar based growth cycle we've observed over the last year.  Policy drives currencies and the Dollar is breaking down - with significant global macro investment implications.

 

2.  #EuroBulls: European economic performance has been a shipwreck in its protracted "crisis", but the tide is turning. We're bullish on the marginal, positive change in the fundamentals, the improving risk climate, and the EUR versus the USD as Bernanke and Co. talk down U.S. growth and the Greenback. We identify the countries and asset classes that we expect to outperform across the continent.   

 

3.  #GetActive: With the equity fund flow story on hold for now, we think the easy money has already been made in 2013. For much of the year, tuning out the ever-changing consensus bear case and staying long of market beta was alpha. Now that is no longer the case, as alpha generation will increasingly be determined by stock/industry selection and risk managing one's gross and net exposure. Additionally, monetary and fiscal policy uncertainty is likely to contribute to rising volatility across a variety of asset classes.

 

- Hedgeye Macro



NKE: Just Doing It

Takeaway: NKE's growth algorithm, return profile, widening gap in category dominance, and astounding product pipe are all near impossible to match.

Editor's note: Hedgeye Retail Sector Head Brian McGough just returned from Oregon where he attended Nike's analyst day. Brian has been a big Nike bull for some time and says the stock deserves its 20x+ multiple all day long. According to McGough, "Nike won't make you rich here, but it'll still make you money -- and with a very low risk profile." Here's a brief excerpt from a report he just issued. Click here for more information on how you can sign up to receive his research.

 

NKE: Just Doing It - pink2

 

1. Focus: There were no startling revelations at the Nike analyst meeting (as we expected). But the focus and cohesiveness of the new management team was exceptional.

 

2. A cliché worth repeating. The company remains maniacal in its quest to innovate. That sounds like a cliché when talking about Nike, because it’s all management from the CEO on down ever talks about.  But in evaluating the product pipeline, it’s abundantly clear that literally no one can compete effectively with Nike without a painful outsized capital outlay.

 

3. Nike is expensive, and it should be. While we wish there was a bit more controversy on the name, the reality is that it is executing so well that it’s tough to poke holes in its growth algorithm and business visibility. CFO Don Blair noted that its goal is to generate returns in the upper quartile of the S&P. That goal to us seems modest. With 9-10% top line growth, 30bp-50bp in gross margin improvement each year as Nike builds its Direct model, better than 25% ROIC, and all the capital it needs ($5bn) to return shareholders – it’s safe to say that not many companies (in the S&P, Dow, or the whole market for that matter) could match Nike’s growth algorithm, category dominance, stability in growth, and return profile. Simply put, it deserves its 20x+ multiple all day. This stock won't make you rich, but It'll make you money -- with a low risk profile.

 


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Hedgeye Q4 Macro Theme #1

Takeaway: The biggest, current risk to forward growth domestically is not Congress, it's the prevailing policy position of the Fed.

#BernankevsCongress: The biggest, current risk to forward growth domestically is not Congress, it's the prevailing policy position of the Fed. Policy drives currencies and the Dollar is breaking down - with significant global macro investment implications.

 

Hedgeye Q4 Macro Theme #1 - mi1

 

This is a brief excerpt from Hedgeye's 52-page Q4 Macro Theme Deck. For information on how you can subscribe to Hedgeye research click here.

 



DIAL-IN & MATERIALS FOR FLASH CALL: DISMANTLING DARDEN

Takeaway: Please join us today at noon. Call details below.

Please join us for a flash call titled “Dismantling Darden” today, October 11th at 12:00pm EDT.  On the call we will discuss the opportunities we see to significantly increase shareholder value at Darden.  We have pursued this topic extensively and put together a 30 page Black Book, highlighting Darden’s inefficiencies as well as our vision for a potential turnaround.

 

 

TOPICS OF DISCUSSION INCLUDE:

  • Reshaping the enterprise
  • Operating trends among the worst in the casual dining industry
  • Darden’s bloated cost structure
  • Sum of the parts valuation
  • What are the implications of the Barington Capital news and what is next for the company?

 

 

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 493295#
  • Materials: CLICK HERE

 

 

If you have any questions, please email or call.

 

 

 

Howard Penney

Managing Director


the macro show

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