Twitter shares got royally shellacked yesterday falling almost 18% after its IPO lock-up period ended. Shares finished trading around $32.
Twitter shares got royally shellacked yesterday falling almost 18% after its IPO lock-up period ended. Shares finished trading around $32.
Takeaway: Canada won’t be upset if TGT leaves. Nike clearing FuelBands - to its detriment? We don’t think Drexler is TGT-bound. PVH licensing spree.
EVENTS TO WATCH
TGT - Vote: Will you miss Target if it leaves Canada?
Takeaway: This is snap of a poll we found on Canada's Globe and Mail site. Whether or not you believe in the validity of these straw polls, its hard to ignore the opinion of 10,000+ people. A quick note on the sample, we stress-tested the system to see if we could vote multiple times (which would therefore inflate the negative sentiment) - but, no dice. These results seem like they're for real.
It's particularly interesting that those who say they will miss Target in Canada totals 11%. Given that 11% of Canadian citizens had shopped at a Target in the US in the 12mnths prior to Canada's opening it leads us to believe that a good chunk of the 11% who say they will miss TGT Canada were already established US shoppers. To us this means that 1) Target Canada has yet to establish meaningful brand equity outside of its carry over customers from the US, and 2) customers missing Target in Canada is mostly a function of convenience.
NKE - Gen 1 FuelBand on The Clymb
Takeaway: Now this one is strange. This is the first time that FuelBands are showing up on The Clymb, a well-respected site for outdoor enthusiasts. But they're not the latest generation FuelBands -- these are the White Ice and Black Ice models -- which were sold a year ago. Looks to us like Apple is mandating that Nike clears all its old inventory of FuelBands before those two launch their new partnership (Nike on software, Apple on hardware). What we find most perplexing is that FuelBands, or any other Wearable Technology device that tracks fitness levels, are not like shoes or Hoodies where you can own a dozen items. This is a category where you own just one -- and you need to use it consistently in order to get the full benefits. You can't switch off to other devices like you switch sneakers. What will these people think in another few months when there's a new piece of Apple hardware co-branded by Nike? Will Nike have cannibalized its own sales by clearing old FuelBands?
PVH - PVH Corp. Announces License Agreement with Leisure Brands (Pty) Ltd. for IZOD Brand
Takeaway: This is yet another seemingly insignificant licensing move by PVH. In isolation, perhaps it is. But the reality is that we're all going to wake up one day in the not-too-distant future and PVH will be generating growth of a few percent just from the latent growth associated with these licensing deals. Is it a reason for us to get excited about the stock? No…not unless people are underestimating growth for the company in aggregate. We don't think that's yet the case.
Jcrew - Mickey Drexler Discusses J. Crew Mercantile
Takeaway: We were asked twice yesterday if Drexler would go to Target's C-Suite. We'd be floored to see him make the move. The reality is that his sweet spot is innovating and brand building for small-mid sized companies. He did it at Gap. Doing it at J Crew.
BLKIA - Belk teams up with the Dallas Cowboys Cheerleaders
Takeaway: With football players, Brands compete for the right to sell replica product to the masses. But somehow we don't think that quite applies to Dallas Cowboys Cheerleaders gear.
VFC - Thinking Young, Wrangler Sees Red
WMT - Wal-Mart Boosts Tech
SKX - Skechers, Marcolin Extend Deal
BBG - Billabong Appoints Global General Manager, RVCA
SHLD - Edward Lampert Says Sears Must Trim Apparel
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.
Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.
QUESTIONS FOR MANAGEMENT
RECENT MANAGEMENT COMMENTARY
On track to open in mid-2015
Targeting a topping out of the entire property and the hotel tower around late-summer, early September.
5th CoD Hotel Tower
The project is expected to open in early 2017. With 40 floors and a gross floor area of 150,000 square meters, the tower houses approximately 780 guestrooms, suites and villas exceeding 5 star standards. The hotel also includes a variety of meeting and event facilities and distinctive features, including a 30m high lobby atrium, selection of restaurants, spa, ultra lounge and sky pool.
Distribute 30% of net income
Philippines tax situation
Working very closely with PAGCOR
High premium mass hold rate at CoD
It's very, very sustainable, especially in a sense that we see a lot of demand from this premium segment.
1Q Non-operating guidance
Corp expense: $24-26m
Consolidated net interest expense: $31-33m (includes finance lease interest of $11m (CoD Manila and $17m interest expense associated with Studio City).
Cap interest: $18m
Tickers: BYI, MGM, PENN, GLPI, HT
Wednesday, May 7
• STAY Q1 – 830am
• STN Q1 – 4pm
• CZR Q1 – 5pm , Passcode: 20337702
Thursday, May 8
• PCLN Q1 – 730am
• MPEL Q1 – 830am , Passcode: MPEL
• CAR Q1 – 830am , Passcode Avis Budget
• BEE Q1 – 10am , Passcode: 10895989
• HOT – 10:10am presenting at Baird's 2014 Growth Stock Conference
• SGMS Q1 – 430pm , Password: SGMS
Friday, May 9
• HLT Q1 earnings – 10 am , Passcode: 25981567
• AHT Q1 earnings – 11 am
Monday, May 12
• DRH Q1 earnings – 10am , Passcode: 66393516
• HMIN Q1 earnings – 9pm
Tuesday, May 13
• HTHT Q1 earnings – 9pm , Passcode 28722442
Wells Fargo Gaming Conference in Las Vegas (all times EDT)
• 11:40 am PNK
• 12:20 pm IGT
• 12:20 pm CHDN
• 1 pm BYD
• 1 pm MGAM
• 1:40 pm PENN
• 2:25 pm BYI
• 5:05 pm SGMS
• 5:05 pm Seminole Gaming
• 5:50 pm GLPI
• 5:50 pm Golden Nugget
1:1 meetings only – MPEL, Station Casino, Motor City Casino & Hotel, and Jacob’s Entertainment.
BYI – announced an agreement with Golden Nugget, to connect BYI’s systems and slot products across all five Golden Nugget casinos (including upcoming Golden Nugget Lake Charles) encompassing nearly 6,400 slots and table games in four states, including Nevada, New Jersey, Mississippi and Louisiana. BYI will replace a competitor’s systems at Golden Nugget properties in Vegas and Laughlin.
Takeaway: Good deal for BYI. We think it replaced Aristocrat's systems in Vegas and Laughlin.
MGM – James Murren sold 26,778 shares of the company’s stock on the open market in a transaction that occurred on Thursday, May 1st. The stock was sold at an average price of $25.22, for a total value of $675,341. Following the sale, the chief executive officer now directly owns 22,286 shares in the company.
Takeaway: Not a ton of stock (may have been sold to offset taxes) but then again, he doesn't own a lot of stock - direct ownership is 22,286 shares while 175,329 shares are owned by a limited access spousal trust.
PENN / GLPI – Penn National announced Desiree Burke has resigned her position as vice president and chief accounting officer in order to accept a position at GLPI.
Takeaway: Move across the hall...
HT – announced that the Company has entered into a definitive agreement to purchase the 148-room Parrot Key Hotel & Resort in Key West, FL for $100 million. The hotel operated at an average daily rate (“ADR”) of $230.52 and occupancy of 92.3% in 2013. According to Hersha, the purchase price for Parrot Key reflects a trailing and forward 12-month economic capitalization rate, as of April 2014, of approximately 7.2% and 7.5%, respectively, and a 9.0% capitalization rate on stabilized earnings. For the trailing twelve months as of March 31, 2014, the hotel generated $7.5 million in EBITDA or approximately $50,000 per room.
Takeaway: This would appear to be a full price for a great quality asset in a consistently strong, transient destination market.
Lawmaker urges government to close mainlanders´loophole to visit Macau Macau News
Lawmaker Antonio Ng Kuok Cheong urged the government Tuesday to close the loophole which is being used by mainlanders to stay in the city for up to nine days as "transit passengers". According to current immigration rules, mainland Chinese passport holders are allowed to stay in Macau for seven days the first time they use Macau as a "transit point" before supposedly heading for a third destination. The second time within 30 days they enter they are given a two-day visa, while the third time they are routinely refused entry. However, if the mainland Chinese passport holder can prove that he or she went to a third destination from Macau, a seven-day visa will be granted again, with no limit on the number of times. After 30 days the process re-sets itself.
Takeaway: This issue continues to get more political spotlight.
Sands China boss says gaming demand sufficient Macau Business
Sands China CEO Edward Tracy expects Macau to have enough demand to keep all the forthcoming gaming industry capacity busy. Tracy said, “We’re pretty confident that there’s plenty of market left to absorb the capacity that’s coming in 2017 and 2018.”
Takeaway: We agree although the dealer labor situation needs to be addressed.
Missouri Gaming – Missouri lawmakers have passed a bill that will permit casinos in that state to offer lines of credit to high rollers. The measure now sits on the desk of Gov. Jay Nixon.
Takeaway: Interesting advancement in gaming policy that would seemly make Missouri more competitive in regional gaming.
Hedgeye remains negative on consumer spending and believes in more inflation. Following a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive.
Takeaway: We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.
Get the US Dollar right (i.e. get the Yen/USD right) and you’re getting the Nikkei right – with the USD smoked to a fresh year-to-date low yesterday, it was no surprise to see Japanese stocks rocked for a -2.9% Nikkei loss overnight = down -13.2% YTD.
The yield bounced (2 beeps) then failed to 2.58%, so the TAIL risk (to the downside for both yields and consensus growth expectations) remains on. Yesterday’s Core Logic (US Housing) price decline (2nd derive) was flat out nasty – both US #ConsumerSlowing and #HousingSlowdown are currently in our Top 3 Macro Themes.
This isn’t the SP500. This is growth expectations slowing, faster – RUT is down -8.3% from its all-time-bubble-high and the high multiple stocks are down a lot more than that. Our risk management playbook says when A) inflation accelerates and B) growth slows, you get equity multiple compression (bond multiple expansion).
|FIXED INCOME||20%||INTL CURRENCIES||20%|
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.
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.
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.
2 most bearish TREND risk S&P Sectors in our model = Consumer $XLY and Financials $XLF @KeithMcCullough
"Today I will do what others won't, so tomorrow I can accomplish what others can't." - Jerry Rice
Most of the people choosing health plans under the Affordable Care Act — about 80% — are paying their initial premiums as required for coverage to take effect. But the health insurance industry said the total of eight million people who signed up included “many duplicate enrollments” for consumers who tried to enroll more than once because of problems on the website. (New York Times)
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