We will be hosting a live Flash Call on Friday, September 11th at 11:00am ET.


As we stated a few weeks ago in a note, we added UNFI to our LONG bench (NOTE HERE). Now, after doing more work we are very confident in the longevity of this company and as a result are upgrading it to a LONG. UNFI has been battered down this year by ~35% due to significant worries stemming from the loss of the Albertsons contract as well as the competitive landscape.  Although increased competition (KeHE) and the potential of the captive systems are some of the biggest risks, we feel that this loss is an isolated incident and the company should not be penalized to this extent.


On August 20th, UNFI pre-announced 4Q15 and FY16 outlook and provided some positive color about the future for UNFI. Management provided positive commentary about the performance in the first two weeks of 1Q16, although only two weeks, it’s a marked sequential improvement and suggests that the core business remains strong.  Following the loss of the Albertsons contract, the notion that UNFI will continue to lose customers is overblown and not very realistic in our minds. UNFI provides a value added proposition (a high level service to retailers), offering a wide variety of over 80,000 products at industry leading prices. The industry is seeing continued growth in natural & organic, specialty, ethnic gourmet and fresh, all of which UNFI offers and can package together to provide retailers great value.


Following the disappointing end to FY15 UNFI is in a great position to leverage the strong asset base it has built.  Over the past two years, UNFI has gone through a period of significant investment in capacity to take advantage of the growth in the fresh, natural and organic market place.  With this investment in the past, capex will be declining to more modest levels, about 0.6% - 0.7% of net sales.  As a result, free cash flow is going to start to ramp up significantly and coupled with an underleveraged balance sheet M&A will become a bigger part of the story going forward.


The topics we will cover on the call will be:

  • The strong competitive position of UNFI
  • The significant growth opportunity
  • The strong financial position
  • Our estimate of +40% upside in the name



Toll Free:


Confirmation Number: 13618360

Materials: To be provided approximately 1 hour prior to start time


Please call or e-mail with any questions.


Howard Penney

Managing Director


Shayne Laidlaw



EARLY LOOK FLASHBACK: 'Do The Macro Before The Macro Does You'

Editor's Note: What follows below is an abridged excerpt from Hedgeye's Early Look written by CEO Keith McCullough on 8/20/15. We've said it before (and we'll say it again), if you're tired of recycled, second-rate, consensus research...there's a bona fide solution. Click here to learn more and subscribe.

*  *  *  *  *

EARLY LOOK FLASHBACK: 'Do The Macro Before The Macro Does You' - z vv

The Big Picture

Since we started Hedgeye in 2008 with a macro view that the Fed couldn’t devalue their way out of a cyclical slowdown, I can’t tell you how many times I’ve been asked how I think this all ends.


“This” being the grand central-planning experiment of our time.


You know, the one that’s based on the linear-economist premise that “shock and awe” rate cuts, bazookas, and currency devaluations can not only smooth economic cycles, but raise the heavens and part the seas…


But what happens then the US economic cycle slows into a stiffening demographic (secular) headwind? What happens when all of the world’s growth and inflation expectations start to slow, at the same time?


If you didn’t know the answers to these questions, now you’re starting to know. It ends how it all started. It ends in the capitulation of the Currency War. This is it. This is the war that nobody, other than we Wall Street types, will come to fight for.


EARLY LOOK FLASHBACK: 'Do The Macro Before The Macro Does You' - currency wars

Macro Grind

Got capitulation via devaluation? After Vietnam devalued the ding Dong (their currency) yesterday, Kazakhstan opted for the -23% daily-devaluation overnight. If you don’t follow Global FX, you do now.


“But I’m an equity guy.” Yep. Totally get it. I used to be too. Then I got crushed by the macro and decided I better do some macro before the macro did me. Interconnected risks between policy moves, currency crashes, and equities matter, big time.


In the last year alone, “Emerging Market” Equity outflows have almost doubled the outflows they saw during the 2008 crash. Why the 2-bagger? Because when my boy Bernanke devalued the US Dollar to its post Nixon low (2011) chart chasers rammed their asset allocation pie charts into countries that “emerged” with strong currencies on the other side.


In other words, the outflow is a function of the prior inflow. Chase high; puke low.


Now a US Equity only guy/gal should be quick to say something like “but the market is only -3% off its all-time high.” And last I checked, that was true in NOV of 2007 and MAY of 2000  too. This is what happens at cycle tops – trailing returns look awesome.


But then you start to see the internals (and externals) break-down, crash, and challenge all of that awesomeness. And that is precisely what you are seeing right now. From a Global Equities perspective, in the last month alone, here are some draw-downs:


  1. Greece -18%
  2. Russia -13%
  3. Singapore -11%
  4. Hong Kong -10%
  5. Germany -10%
  6. Turkey -9%
  7. South Korea -8%
  8. Australia -7%
  9. United Kingdom -6%

    10. USA (Russell 2000) -5%


And voila. There it is, the Russell (2000 stocks) is “outperforming” the rest of the global growth and inflation slowing gong show. And the SP500 is outperforming that better yet. “So” everything must be fine. Global reflation and growth must be fixin’ to rip!


Let’s get serious here and not make the mistakes many equity only investors did in 2000 and 2007. Let’s not ignore the growth and inflation slowing data. Let’s not close our eyes when we look at the bond market either.


What say you Mr. USA Bond Market?


  1. TREASURIES (10yr) = 2.11% this morning after dovish Fed Minutes (that reflect dovish data)
  2. JUNK = making lower-lows (4yr lows), daily, as spread risk widens (as it always does when growth slows)


There’s that darn combo Hedgeye keeps using, #GrowthSlowing.


But what does it mean when the entire edifice of central-planning and those that market asset management at its alter are promising 2x the baseline growth (GDP) that is actually occurring? *reminder, Hedgeye is at 1.4% q/q SAAR and 1.6% y/y


Every single perma-bull economist/strategist in the US has not only a “3-4% US GDP” forecast in the 2H of 2015, but has it mapped in excel as far as the linear-seeing-eye can fathom, into 2016 and beyond.


That, to put its duration in historical context, implies the greatest economic expansion since WWII. And I’m thinking less American realists sign up to come fight for an un-elected central planning war today than they did for The People back then.


EARLY LOOK FLASHBACK: 'Do The Macro Before The Macro Does You' - z xb

Our levels


Our immediate-term Global Macro Risk Ranges are now:


UST 10yr Yield 2.07-2.18%

SPX 2061-2090
RUT 1190-1213 
VIX 13.49-15.83 
USD 95.62-98.19 
Oil (WTI) 40.07-42.65


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


EARLY LOOK FLASHBACK: 'Do The Macro Before The Macro Does You' - z 89



RTA Live: September 8, 2015


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

Do You Airbnb? A Record 17,000,000 Travelers This Summer (And Growing)

Do you Airbnb? 


A record 17 million travelers around the world stayed with Airbnb hosts in 150 countries this summer from May to the end of August, according to a summer metrics report recently released by Airbnb.


Do You Airbnb? A Record 17,000,000 Travelers This Summer (And Growing) - z a 55


And that number hasn’t topped-off.


According to the company, another 1 million travelers booked Airbnb stays this past Labor Day weekend in the U.S. The number of summer guests swelled from 7.4 million last summer to more than twice that amount this summer.


Some additional interesting color:

  • Airbnb guests from Paris, New York City and Seoul were this summer’s largest source markets and they made the most bookings for Lisbon, Upstate New York, and Osaka, Japan, respectively.
  • South Korea, along with Japan and Singapore, are the company’s fastest growing markets overall. China is one of the fastest-growing markets in terms of country of origin for travelers booking stays outside their country.
  • The report reveals the average age of this summer’s Airbnb guests was 35 years old, which is considered the oldest age for millennials. Female guests slightly outnumbered male guests – the split was 54% to 46% globally.

Do You Airbnb? A Record 17,000,000 Travelers This Summer (And Growing) - z todd

Post Labor Day Mashup

Post Labor Day Mashup - CHART 1



9/04/15 GIS | Sends the Jolly Green Giant Packing



8/28/15 GIS | Time to Close this Deal




Thursday, September 3

GIS / BGS | B&G Foods agrees to acquire Green Giant from General Mills for $765mm (click here for Hedgeye note)


Wednesday, September 2

MDLZ | Opened a new $30mm manufacturing line in Poland, in an effort to take advantage of the growth opportunity in European snacking (click here for article)

GIS | Upgraded to equal-weight from underweight at Morgan Stanley, the firm sees improved visibility from the company’s increased efforts to manage costs


Monday, August 31

BETR | Initiated neutral at Goldman Sachs, price target is $18, current price is $12.27, GS ran the IPO for BETR



Food and organic stocks that we follow outperformed the XLP last week. The XLP was down -2.4% last week, the top performer on a relative basis from our list was B&G Foods (BGS) posting an increase of +20.9%, after their acquisition of the Green Giant assets from General Mills. Worst performing company on a relative basis on our list was Hain Celestial (HAIN), which was down -4.0%.

Post Labor Day Mashup - CHART 2



From a quantitative perspective, the XLP is bearish on a TRADE and TREND duration.

Post Labor Day Mashup - CHART 3


Food and Organic Companies

Post Labor Day Mashup - CHART 4

Post Labor Day Mashup - CHART 5

Post Labor Day Mashup - CHART 6


Keith’s Three Morning Bullets

Dovish Fed article out of @WSJ as another wanna be hawk (Williams) fades alongside stocks:


  1. VIX – does an explicitly more dovish Fed tone down short-term volatility here? My risk range model actually implies it could as the top-end of my range on front-month VIX no longer has a 4-handle in front of it (range still elevated, but 22-36)
  2. FX – Down Dollar = Up Yen = Nikkei Down (another -2.4% overnight), so not everyone is a winner; risk ranges are narrowing though as volatility across asset classes does this am (risk range for EUR/USD narrows to $1.10-1.14)
  3. RATES – UST 10yr dropped to 2.11% on the slowest rate of change in Non-Farm Payrolls since the Labor Cycle gains peaked in FEB, then back up this morning to 2.15% with Spanish 10yr +7bps approaching parity w/ UST at 2.14%


SPX immediate-term risk range = 1; UST 10yr 2.07-2.19%


Please call or e-mail with any questions.


Howard Penney

Managing Director


Shayne Laidlaw




Watch a replay of this presentation below.


We will host a Macau conference call Today, September 8th at 11am ET to present more analysis on the August numbers, our projections and outlook, and where the Chinese may or may not be gambling. As always, we will entertain questions at the end of the presentation.



LVS, WYNN, MGM, MPEL, 0027.HK, 1128.HK, 1928.HK, 2282.HK, 6883.HK, and 0880.HK.



  • Hedgeye company EBITDA estimates vs the Street for Q3, 2015, and 2016
  • Revised 2015/2016 monthly market projections
  • The promotional environment
  • "True" Mass trends
  • Research Topic: Where has the lost Macau business gone? 


Attendance on this call is limited. Ping  for more information

the macro show

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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.