VIDEO | Three Reasons To Stay Bearish On Oil


In this Hedgeye Macro Minute, Director of Research Daryl Jones discusses the three biggest bearish data points on oil for both intermediate and long-term durations.

Flash Call | PNRA: The Activist Playbook

Takeaway: We’re hosting a flash call tomorrow, April 17 at 11am EST to run through the activist playbook on PNRA. Dial-in details and materials to fol

Last night Panera announced in a press release that its Board of Directors approved an increase to the company’s share repurchase program to $750 million. The company expects to repurchase $500 million over the next twelve months.  The release also highlighted the progress that Panera is making in its previously announced refranchising initiative.  The company has entered letters of intent to sell 73 cafes and is expected to reach its refranchising goal by year end (50-150 cafes).  This initiative, which is expected to be accretive to earnings, was reflected in management’s 2015 EPS guidance.


On March 3, 2015 we penned an open letter to CEO Ron Shaich detailing our activist playbook on the company:



In this letter, we recommended five steps he should consider taking in order to unlock significant shareholder value:

  1. Sell-off non-core assets
  2. Slowdown the rollout of Panera 2.0 and begin molding a concept of the future
  3. Slow unit growth and cut capital spending
  4. Cut excessive SG&A spending
  5. Aggressively refranchise stores

We believe these changes to the business model will significantly enhance the margins, returns, and overall earnings power of the company.  We put the baseline earnings power of the company between $8-10 per share and the implied stock price between $240-300.


We look forward to further articulating these recommendations on the call tomorrow.

Keith's Macro Notebook 4/16: Commodities | Australia | Eurozone


Hedgeye Director of Research Daryl Jones  shares the top three things in CEO Keith McCullough's macro notebook this morning.

the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

Commodities, Australia and Greece

Client Talking Points


A weaker dollar is positive for commodities, as the Fed downwardly revised growth and inflation targets on March 18th the USD has been down about 1.6% against the CRB Index which has been lead by Energy. Our immediate-term risk range for the USD is 98.01-100.24 (the USD remains in a bullish formation).



The Australian Dollar is up about 1.3% this morning after a strong employment report. They added more than expected full time jobs in March about 37.3K, Australia's unemployment rate has now fallen to 6.1%. The labour force participation rate jumped to 64.8% in March from a revised 64.7% in February.


The major index in Greece is down about 5.5% on the week, the big challenge here is that there has been little to no progress with Greece’s international creditors. Germany’s Finance Minister effectively came out yesterday and said no one expects a deal to be made next week (the Eurogroup is meeting on April 24th).

Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

Manitowoc  (MTW) is splitting the business into two companies. While the crane business receives the most attention in part due to its cyclicality and because they are well, more noticeable, Manitowoc’s other business, Foodservice equipment, is the larger of the two in terms of operating income (60% vs. 40% for Cranes). Several indicators are pointing towards upward momentum for MTW’s Foodservice business. Restaurant same store sales have benefitted since the drop in oil prices. Furthermore, an indicator by the National Restaurant Association, RPI Capital Expenditures Index, has surged recently in part due to lower fuel prices driving restaurant traffic and restaurant owners’ outlook.


iShares U.S. Home Construction ETF (ITB) is a great way to play our long housing call. The housing data was again strong in the latest week with Pending Home Sales, HPI and Purchase Demand all accelerating to close out March. Pending Home Sales rose +3.1% sequentially in February with signed contract activity up a remarkable +12% YoY, taking the index to a new 19-month high. Mortgage Purchase Applications – the most real-time, high frequency housing demand indicator - rose +5.7% WoW on the back of last week’s +4.9% advance and accelerated to +7.6% on a year-over-year basis. HPI: The Case-Shiller 20-city series showed home prices grew +4.6% year-over-year in January.  A stabilization/inflection in home price growth is important as housing related equity performance tracks the slope of home price growth strongly.


It was another week of declining long-term yields getting you paid on the long-side of Low-volatility Long Bonds (TLT). To reiterate our view over the longer-term, we pin a good chance the U.S. Dollar will reach new highs ($120 anyone?) with the probably of long-term Treasury yields reaching all-time lows very much in play.

Three for the Road


Former Fed Chairman Ben Bernanke to be senior adviser to Citadel Investment - NY Times



Never say never, because limits, like fears, are often just an illusion.

Michael Jordan


By one estimate U.S. online political advertising could quadruple to nearly $1 billion in the 2016 election (Reuters).

Retail Callouts (4/16): NKE, UA, CROX, KSS, JCP, ETSY, GES, SHLD

Takeaway: Athletic brands spending big on women. More wage pressure – still more to come. Etsy IPO – Good Idea or Bad Idea? CROX looking better to us.



NKE - Launches Largest Women's Campaign Ever


Takeaway: We always cringe when we hear 'biggest campaign ever'. The way we see it, if a company is growing, shouldn't every year mark the 'biggest campaign ever'? In fact, Nike generates about 20% of its sales from women -- or $5bn+. Put in context, Nike's women's sales are 10-20% greater than the combined total sales of UnderArmour and Lululemon.  That said, Nike sees that LULU will arguably stop ceding share, and they see full well that UnderArmour is putting on a full court press with the recent signing of Misty Copeland and Gisele Bundchen -- on top of Kevin Plank's statement that Womens should be as large, if not larger than its Men's business.  UA might be a threat...but perhaps the scariest number of all is Nike's $10bn SG&A budget. It could double its dollars for its' Womens line and nobody would even notice -- except the competition.

Retail Callouts (4/16): NKE, UA, CROX, KSS, JCP, ETSY, GES, SHLD - 4 16 chart1B


Giant Foods to raise minimum pay to $9 an hour


Takeaway: Some companies may use the recent wage hike trend to hug their employees with a  press release on wages that has minimal effect on the bottom line.  Here Giant Foods is taking their minimum wage up to $9 an hour, noting that 2/3 of the employees already make more than that.  Still 10,000 employees are getting a pay bump, and the Giant employees who already made $9/hr a week ago are probably now haggling their supervisors for a fair raise as well.

Our analysis shows that for wages in the department store space, KSS is at most risk with the highest potential impact to EPS, and the lowest compensation rate according to glassdoor. 

This is not an issue now, and that's fine. But when retailers inflate temporary workforces in July ahead of back-to-school, and then again (but to a greater degree) around holiday, we think that the spread between those who have proactively managed workforces (WMT, TGT, TJX, MCD, etc…) versus those who have not (KSS, JCP, M) will widen.

Retail Callouts (4/16): NKE, UA, CROX, KSS, JCP, ETSY, GES, SHLD - 4 16 chart2


ETSY - Etsy Inc. Prices IPO at $16 Share


Takeaway:  So...Etsy is going public. This is either a really good idea, or a really bad idea. We're inclined to think it is the latter. Etsy is an online marketplace for handmade or vintage items, as well as manufactured goods that fit Etsy's 'green' guidelines.   Etsy has about 54 million members -- about 39% of which are active. There are 1.4mm active sellers and 19.8mm active buyers globally.  One interesting point is that Etsy is the largest B-Corp to go public. To meet B-Corp certification standards, a company has to meet certain environmental, transparency, and accountability standards. In addition, it made a 'considerable' commitment to consider the interests of its stake holders, not just its shareholders.  That's admirable -- though as investors we need to account for how this approach accrues to shareholders. If it drives more active users -- both buyers and sellers -- then it's a pretty unique idea. But the stakes are high given that this company generates about $195mm in revenue, a 57% gross margin (good), but is losing money.

Retail Callouts (4/16): NKE, UA, CROX, KSS, JCP, ETSY, GES, SHLD - 4 16 chart3B


CROX - Crocs, Inc. Appoints Coach's Ian Bickley to Board of Directors


Takeaway: Good move by CROX -- something we like to see as the name is on our Long Bench.





TGT - Target Announces Settlement Agreement with MasterCard; Estimated Costs Already Reflected in Previously Reported Results



SHLD - Poor Returns Weigh on Sears Pension Plan



PRTY - Party City IPO values U.S. retailer at nearly $2 billion



ELY - Callaway Golf Company Appoints Robert Julian As CFO



CAB - Cabela’s Inc. Announces Appointment of James F. Wright to Board of Directors



ANF - Diane Neal to Leave Abercrombie & Fitch Board



HBC - Saks names new head merchant



H&M Plots U.S. Expansion



GES - Georges Marciano Brings Second Suit Against Guess



Rebecca Minkoff Opens in Hong Kong



Fast Retailing- Carine Roitfeld announces collaboration with Uniqlo



Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.