9/23/15 WHAT’S IN STYLE?
9/16/15 UNFI | LOVE THE LONG THESIS
9/15/15 K | NICE MOVE, BUT NOT ENOUGH
Monday, September 28
K | Announced that it has acquired Mass Food Group, Egypt’s Leading Cereal Company for approximately $50mm (ARTICLE HERE)
WFM | Announced a plan to cut 1,500 positions (ARTICLE HERE)
Thursday, September 24
DMND | Rumored that Diamond Foods is working with Credit Suisse to sell itself
Wednesday, September 23
POST | Acquiring Willamette Egg Farms, the business is expected to contribute $80mm in sales and $15mm of adjusted EBITDA (ARTICLE HERE)
Tuesday, September 22
GIS | Delivered 1Q16 bottom line results that were above consensus estimates. Although, overall top line numbers came in short of expectations; the U.S. Retail division beat both internal and external expectations. Although it is just one quarter, we remain optimistic on the name long term (HEDGEYE NOTE HERE)
Food and organic stocks that we follow underperformed the XLP last week. The XLP was up +0.6% last week, the top performers on a relative basis from our list were Amira Natural Foods (ANFI) and Diamond Foods (DMND) posting increases of +31.2% and +8.8%, respectively. The worst performing company on a relative basis on our list was Lifeway (LWAY), which was down -13.2%.
XLP VERSUS THE MARKET
The XLP has fared better than most other sectors in the YTD time period and as of late especially. In the last five trading days while the SPX was down -1.4%, the XLP was actually up +0.6%, outperformed only by XLF (Financials) and XLU (Utilities).
From a quantitative perspective, the XLP is bearish on a TRADE and TREND duration.
Food and Organic Companies
Keith’s Three Morning Bullets
IMF cutting global growth forecasts (again) as macro markets continue to crash:
- USD – a one-day move higher (off the lows) in USD and rates does not a credible rate hike make – no follow through so far on that w/ Yen actually +0.2% vs USD this morning (Nikkei doesn’t like that, down another -1.3%)
- RATES – bond market doesn’t believe Yellen – neither does the growth data; 0.69% 2yr and 2.16% 10yr both remain bearish TREND signals for yields as Utilities (XLU) continue to breakout (+1.2% in a down tape last wk, +2.9% in the last 3 months)
- CRASHES – Biotech stocks (IBB) moved into crash mode on Friday (-22% from the July peak) joining China, Germany, Spain, Oil, Emerging markets, etc. in what is the most visible slow-moving-train-wreck I have seen in High Beta in my career; Latin American Stocks (MSCI) -27.3% in last 3 months
SPX immediate-term risk range = 1; UST 10yr 2.07-2.21%
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