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REPLAY PODCAST & SLIDES: IS IT TIME TO BUY BRAZIL?

Earlier today we hosted a conference call to discuss why it may finally be the right time for investors to reallocate capital to Brazil. With the Bovespa Index down -54% in USD terms since peaking in APR ’11, we now think it’s appropriate to explore whether or not the currently distressed prices of Brazilian assets represent real value or if they remain a value trap. Per usual, we concluded the call with a live Q&A session.

 

A brief synopsis of the key takeaways can be found here on our @HedgeyeTV YouTube channel: http://www.youtube.com/watch?v=baUM6Z69FN8.

 

KEY TOPICS INCLUDED

 

  • A review of our bearish thesis and key risks over the next few quarters
  • Scenario analysis on whether or not this is a good time buy
  • Is the bottoming process underway for Petrobras (PBR) and Vale (VALE)?

 

CLICK HERE to access the replay podcast.

 

CLICK HERE to access the associated slide deck (72 slides of in-depth analysis).

 

Please email us if you have any follow-up questions that  you’d like us to address.

 

Have a great evening,

 

DD

 

Darius Dale

Associate: Macro Team



$DRI: DARDEN RESTAURANTS HEDGEYE POLL

This note was originally published February 27, 2014 at 14:49 in Restaurants

Earlier this week Starboard announced that they intend to call a special meeting to halt the spinoff of Red Lobster.  We have expressed our concerns with management’s plan because, to us, it makes little strategic sense and doesn’t get at the heart of the problem.

 

Darden is still a company with an inefficient operating structure.

 

$DRI: DARDEN RESTAURANTS HEDGEYE POLL - redl

 

On the day Darden’s strategic plan was announced, the stock closed down 4% to $51.  This didn’t exactly strike us as a vote of confidence in management’s plan to create value.  Two days later, Starboard Value announced a 5.5% position in the company and the stock rallied 6%.  For the most part, the stock has traded sideways since then, until rallying 3% on the news that Starboard retained former Olive Garden president Brad Blum to serve as an advisor in its battle against Darden.

 

The takeaway from stock action and, in our opinion, sentiment since 12/20/13 is the stock rallies when there is movement toward replacing management and sells off when management publicly digs their heels in. 

 

We’ve heard management talk about a plan to fix Olive Garden for five years now, but, they continue to over promise and under deliver.  The current team has had ample time to fix the brand and has failed miserably.

 

It is time for significant change.

 

To review, we’ve included some brief thoughts on why management’s strategic plan makes very little strategic sense and could actually end up destroying value.

 

  • Red Lobster may become less profitable and, as a result, less valuable.
  • The plan does not address the issue of managing multiple brands.
  • Management’s proposed initiative simply removes one underperforming brand from a large portfolio.   
  • Clarence is building a moat around his castle.
  • They are not cutting unit growth or costs as aggressively as they should.
  • There is no real plan to fix Olive Garden.
  • Management has lost all credibility to hit targets.

 

We certainly have a strong opinion on the matter, but we’d like to hear from you.

 


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DARDEN RESTAURANTS HEDGEYE POLL

Earlier this week Starboard announced that they intend to call a special meeting to halt the spinoff of Red Lobster.  We have expressed our concerns with management’s plan because, to us, it makes little strategic sense and doesn’t get at the heart of the problem.

 

Darden is still a company with an inefficient operating structure.

 

On the day Darden’s strategic plan was announced, the stock closed down 4% to $51.  This didn’t exactly strike us as a vote of confidence in management’s plan to create value.  Two days later, Starboard Value announced a 5.5% position in the company and the stock rallied 6%.  For the most part, the stock has traded sideways since then, until rallying 3% on the news that Starboard retained former Olive Garden president Brad Blum to serve as an advisor in its battle against Darden.

 

The takeaway from stock action and, in our opinion, sentiment since 12/20/13 is the stock rallies when there is movement toward replacing management and sells off when management publicly digs their heels in. 

 

We’ve heard management talk about a plan to fix Olive Garden for five years now, but, they continue to over promise and under deliver.  The current team has had ample time to fix the brand and has failed miserably.

 

It is time for significant change.

 

To review, we’ve included some brief thoughts on why management’s strategic plan makes very little strategic sense and could actually end up destroying value.

 

  • Red Lobster may become less profitable and, as a result, less valuable.
  • The plan does not address the issue of managing multiple brands.
  • Management’s proposed initiative simply removes one underperforming brand from a large portfolio.   
  • Clarence is building a moat around his castle.
  • They are not cutting unit growth or costs as aggressively as they should.
  • There is no real plan to fix Olive Garden.
  • Management has lost all credibility to hit targets.

 

We certainly have a strong opinion on the matter, but we’d like to hear from you.

 

PLEASE CLICK HERE TO TAKE THE POLL https://app.hedgeye.com/feed_items/33809-darden-restaurants-hedgeye-poll?page=1

 


BNO: Adding Brent Oil to Investing Ideas

Takeaway: We are adding BNO to Investing Ideas.

Hedgeye's Macro Team is adding added Brent Oil to Investing Ideas. 

 

We will send out a full report from Director of Research Daryl Jones detailing our bullish case.

 

BNO: Adding Brent Oil to Investing Ideas - brent



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