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VIDEO: Tom Tobin Previews Best Idea Call on Athenahealth | $ATHN

 

Earlier today, Hedgeye Healthcare Sector Head Tom Tobin and Analyst Andrew Freedman gave an overview of their upcoming Best Idea Call on Athenahealth. Tom and Andrew offer a brief history of their long idea before outlining the current bull case.

 

The call will take place Thursday, July 23 at 11:00AM ET. If you would like access to this institutional presentation, please contact sales@hedgeye.com


CARNIVAL INVESTOR DAY - CHINA

Arnold Donald, CEO of CCL - commentary on China

  • Absorbs capacity from Caribbean

Alan B. Buckelew, COO of CCL

  • 90% of trips are to Asian destinations, most of them reachable by sea
    • Out of 98 million outbound trips, 88 million are in Asia.
  • Affluent Chinese growing at ~20% (>US$34K), Upper middle class growth ~22% (US$16-34K) CAGR (2012-2022)
  • Lower Passport Application fee $135 (before 2013); $32 (after 2013)
  • Japan: visa-free entry for Chinese cruisers, started March 2015
  • Korea: Visa-free entry to Jeju for Chinese cruisers started in last 3 years
  • Chinese Govt expects tourism to be 5% of GDP by 2020
  • Ministry of transport of PRC provided a detailed map of available Chinese ports
  • Chinese passenger projected to increase: +34% CAGR by 2020
  • Carnival entered Chinese market in 2006 with Costa. Costa reached profitability in 2013 and Princess reached profitability in 2014.
  • Costa: has 20 offices in China
  • 26,000 travel agents in China
  • 2,700 have outbound travel licenses and can sell cruises. Only Chinese companies can secure an outbound travel license.
  • Carnival strategic partnerships: CSSC, CMG
  • Princess target segment: age 30-40; affluent young adults with previous international travel experience, +150k RMB
  • Costa target segment: age 25-45; +120k RMB
  • Chinese prefer shorter cruises (3-6 nights)
  • Revised casino with baccarat 
  • Market share: Carnival has 43% market share; RCL: 32%; Star: 12%; local Chinese 14% (e.g Skysea)

Q & A

 

  • Would consider selling older ships... to Ctrip for example
    • Again, this would make a lot of sense for CCL
  • Constantly evaluating taking other brands to China
  • JV MOU - will be a domestic, Chinese brand
    • Very close on finalizing agreement. Hope partnership will be done in 2015. Ship won't be in the water 'for a couple of years'.
  • Will be a while before you get true competition within China
  • "Demand already exceeds supply"
  • Most Chinese cruisers are new cruisers
  • Carnival sell a lot of their Chinese inventory through distribution charters 
    • Do not see that system changing any time soon
    • Pricing integrity: charters pay Carnival and then go market the cruise
  • New Princess ship in China: expect higher double digit ROIC (above fleet average)
  • Carnival's inventory goes through a wholesale/charter model
    • Lots of charters. No one charter has a significant portion of CCL's bookings.
  • Working with Fincantieri on ship-building capacity in China. Could possibly build a ship from China in next 5-7 yrs.
  • China is a margin driver
  • New onboard initiatives: taking discounted cabins and targeting them towards gamblers.  
  • Cuba: still waiting for green light from Cuba govt regarding lifting the ban on leisure travel
  • Japan market: not going to have same growth as China because culture is quite 'cautious regarding travel'
  • Drydock days in 2015: used to put in more efficient fuel technology
  • Trends in Europe: economic malaise and geopolitical tensions pressuring results. Cruise demand concern as well because of popularity of European beaches. Germany is doing well. Europe doing better in 2015 vs 2014. 


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Sold? Not So Fast: The Truth Behind This Twitter #FakeTakeout Rumor | $TWTR

Hedgeye’s Internet & Media analyst Hesham Shaaban offers his thoughts and clarifies the rumors on this bogus takeout Twitter rumor.

 


Are You Short The S&P 500? (This Could Be Your Waterloo)

 

In this brief excerpt from today's edition of The Macro Show, Hedgeye CEO Keith McCullough weighs in on the slowing U.S. economic cycle and why the bigger risk right now may be shorting the S&P 500 in light of an easier Fed.

Subscribe to The Macro Show today for access to this and all other episodes. 

 

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#ConsumerCycle: Retail Sales & Confidence Slide to Close 2Q

Takeaway: Retail Sales slide to close out 2Q. PCE will accelerate QoQ in 2Q but nothing like the bounceback we saw in 2Q14. We remain a 2%+/- economy

Summary Review:   Headline Retail Sales declined -0.3% sequentially and decelerated on both a 1Y and 2Y basis in June.   While the sequential decline in Auto Sales in June telegraphed the Headline deceleration, the magnitude of retreat was disappointing and the trend across the various sub-aggregates was similarly languid.   

 

Whether aggregate Income growth can maintain its recent ~5% pace and Services and NonDurables consumption can continue to buttress Household Spending growth to the same extent they have in 1H15 remain TBD.  The broader trend is Wage & Salary income and Services consumption (~2/3rds of HH spending) remains positive but the internals in the June employment report were soft and employment & consumption comps steepen in 2H.

 

Small Business Confidence, meanwhile, declined -4.2 pts in June with the Expectations and Job Openings readings leading the decline.  At 94.1 on the Index, NFIB optimism sits at its lowest levels since March of Last year. Consumer Confidence is a canonical late-cycle indicators and is presently just south of prior cycle peaks. 

 

In short, middling-to-down is not what Team Janet wants to see - particularly with sirenic hopes of a September lift-off still lingering and a sustained attempt at policy normalization stirring restlessly in the queue.  

 

June Notables:   

  • Gas:  Gas prices were up ~3% in June but that only translated to a +0.8% sequential gain in Gas Station sales
  • Auto’s:  Auto’s & auto parts were down -1.1% MoM.  Vehicle Sales declined -3.5% sequentially to 17.1 mm units in June – down from May’s gangbusters 17.7 mm figure (a 10Y and post-recession high).  This was a known known with the Vehicles Sales figures reported on  7/1.
  • Building/Furniture:  Building Materials and Furniture were down -1.3% and -1.6%, respectively, in June.  The magnitude fo decline is a bit surprising given the strength in the housing data in 2Q to-date.
  • Industry Momo: 11 of 13 Industries reported decelerating MoM growth while 9 of 13 decelerated sequentially on a YoY basis.
  • Inventory-to-Sales:  We’ll get the updated Inventory-to-Sales ratio’s a bit later but the trend remains higher with Inventories continuing to grow at a premium to sales.  Inventory's contribution to GDP is positive, until it isn't. 

 

Growth Context: 

  • Reported (QoQ Annualized):  In GDP accounting terms (QoQ Annualized; yellow box in Summary Table below) Retail Sales in 2Q are up +3.3% and accelerating relative to 1Q.  In short, household spending on goods will accelerate sequentially in 2Q but we will not see the magnitude of bounce we saw last year off a bad 1Q – Retail sales were up +6.9% QoQ annualized in 2Q last year
  • Year-over-Year:  While May reflected a modest acceleration, June returned to the broader trend of deceleration and, on quarterly basis, 2Q is tracking lower than 1Q and well below the mid-4%’s observed mid-year last year when goods was supporting PCE

  

…and, of course, the requisite Advance Report caveats.   Monthly Advance Retail Sales are notoriously volatile on a month-to-month basis, subject to significant revision and reported on a nominal basis - making it difficult at times to distinguish whether sales trend changes are due to prices or volumes.  What it offers in terms of timeliness, it lacks in terms of precision and magnitude.

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - RS Cycle

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - Retail Sales Headline   Control YoY

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - Retail Sales vs PCE YoY

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - Retail Inventory to Sales

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - RS Summary Table

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - Confidence Cycle

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - NFIB LT

 

#ConsumerCycle:  Retail Sales & Confidence Slide to Close 2Q - Confidence Monitor

 

 

 

Christian B. Drake

@HedgeyeUSA


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