Stronger Currency Works

Client Talking Points

USD

After last week’s +0.4% bounce off its year-to-date lows, the US Dollar has no follow through buying this morning. Both the Euro and Pound look good on the long side vs USD – so does the Yen, which is scary.

COPPER

Big rip of +1.7% this morning to $3.13/lb after Chinese stocks closed up +2.1%. Copper’s immediate-term TRADE breakout line = $3.06/lb and consensus remains short of it (-17,289 net short position in futz/options).

INDIA

Another solid session for Indian stocks as Dr. Raj proves to the world that a stronger currency works. The BSE Sensex is up +2.2% to +11.2% year-to-date, trouncing the Russell2000 which was down another -1.9% last week to -4.8% YTD.

Asset Allocation

CASH 17% US EQUITIES 4%
INTL EQUITIES 10% COMMODITIES 25%
FIXED INCOME 22% INTL CURRENCIES 22%

Top Long Ideas

Company Ticker Sector Duration
HOLX

Hologic is emerging from an extremely tough period which has left investors wary of further missteps. In our view, Hologic and its new management are set to show solid growth over the next several years. We have built two survey tools to track and forecast the two critical elements that will drive this acceleration.  The first survey tool measures 3-D Mammography placements every month.  Recently we have detected acceleration in month over month placements.  When Hologic finally receives a reimbursement code from Medicare, placements will accelerate further, perhaps even sooner.  With our survey, we'll see it real time. In addition to our mammography survey. We've been running a monthly survey of OB/GYNs asking them questions to help us forecast the rest of Hologic's businesses, some of which have been faced with significant headwinds.  Based on our survey, we think those headwinds are fading. If the Affordable Care Act actually manages to reduce the number of uninsured, Hologic is one of the best positioned companies.

OC

Construction activity remains cyclically depressed, but has likely begun the long process of recovery.  A large multi-year rebound in construction should provide a tailwind to OC shares that the market appears to be underestimating.  Both residential and nonresidential construction in the U.S. would need to roughly double to reach post-war demographic norms.  As credit returns to the market and government funded construction begins to rebound, construction markets should make steady gains in coming years, quarterly weather aside, supporting OC’s revenue and capacity utilization.

DRI

Darden is the world’s largest full service restaurant company. The company operates +2000 restaurants in the U.S. and Canada, including Olive Garden, Red Lobster, LongHorn and Capital Grille. Management has been under a firestorm of criticism for poor performance. Hedgeye's Howard Penney has been at the forefront of this activist movement since early 2013, when he first identified the potential for unleashing significant value creation for Darden shareholders. Less than a year later, it looks like Penney’s plan is coming to fruition. Penney (who thinks DRI is grossly mismanaged and in need of a major overhaul) believes activists will drive material change at Darden. This would obviously be extremely bullish for shareholders and could happen fairly soon driving shares materially higher.

Three for the Road

TWEET OF THE DAY

Swiss Retail Sales +3% y/y in March, despite the "weather" @KeithMcCullough

QUOTE OF THE DAY

"A ship is safe in harbour, but that's not what ships are for." - William Shedd

STAT OF THE DAY

The NFL's top draft pick Jadeveon Clowney just landed around a $22 million contract with the Houston Texans. But while Clowney -- and hundreds of other NFL rookies -- know a lot about football, they know little about managing money. Many are likely to end up bankrupt. Just two years after their athletic careers end, 78% of former NFL players are bankrupt or nearly there. (CNN)


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