April 17, 2015

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VIDEO | Why We Like $ZOES

We added Zoe's Kitchen (ZOES) to Investing Ideas on Tuesday April 14, 2015. We are unlocking this excerpt from Restaurant Sector Head Howard Penney's conference call with institutional investors where he outlines his bullish thesis EXCLUSIVELY for Investing Ideas subscribers. 


EWG: Adding German Equities to Investing Ideas

Takeaway: Adding German Equities to Investing Ideas

We are adding German Equities (EWG) to Investing Ideas today. Please see the note below from Hedgeye CEO Keith McCullough and watch a special video excerpt featuring Europe Analyst Matt Hedrick from a call held earlier this week below.



Our Europe Analyst, Matt Hedrick (German American dude) hosted a bullish Institutional Research call on Germany earlier this week and the highlights were as follows:

  • QE is only just beginning; the Euro will continue to weaken; Germany will disproportionately benefit due to exports; and asset classes like equities will inflate due to money creation (the German economy sits in the sweet spot to benefit from a weaker euro as its exports account for a monster 47% of German GDP)
  • Since the ECB announced QE on 1/22/15 the correlation between the DAX and EUR/USD is -0.84, a strong negative correlation that we expect to persist as the ECB keeps its foot on the QE pedal for longer than its intended target (late 2016)
  • Recommending long the DAX (HEWG or EWG) and short EUR/USD (FXE)




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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.

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