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So Much For The Ackman Pop ... Next Stop For Chipotle? $250

Takeaway: The Chipotle shareholder carnage continues as investors fade disclosure of Bill Ackman's 9.9% stake.

So Much For The Ackman Pop ... Next Stop For Chipotle? $250 - chipotle ackman 

Hours after Hedgeye Restaurants analyst Howard Penney hosted his Chipotle (CMG) short call on September 6th, Bill Ackman's Pershing Square Capital disclosed a 9.9% stake in Chipotle. The stock jumped on the news. 

 

But then, as it often does, reality set in... Chipotle's shares are down -9% from the peak of the Ackman hype.

 

Just as Penney predicted hours after the news...

 

And to be clear, he's reiterating the call today.

 

hungry for more?

 

For a good overview of Penney's short call on the company see the CNN Money story, "Why Chipotle could crash another 50%." To read Penney and analyst Shayne Laidlaw's response to Ackman's Chipotle stake after it was disclosed read, "Pershing Has Stepped In Front of a Ticking Time Bomb."

 

Finally, below is short video in which Penney responds to an institutional client's question about the "smoking gun" that will ultimately take down Chipotle.

 

 


Cartoon of the Day: Hawkish or Dovish?

Cartoon of the Day: Hawkish or Dovish? - Fed hawkish dovish cartoon 09.20.2016

Incessant Fed flip-flopping from hawkish to dovish (6x in 8 months!?) is simply insane. What will they do at Wednesday's FOMC meeting? Tell us what you think by casting your vote in our Poll of the Day here.


PREMIUM INSIGHT

Best Idea Long: Why Expedia Holds All The Cards

Best Idea Long: Why Expedia Holds All The Cards - HETV macroshow thumb expedia 9.20.2016

In this excerpt from The Macro Show, Hedgeye Internet & Media analyst Hesham Shaaban lays out our Best Idea Long call on Expedia and why the company’s HomeAway acquisition is a “considerable opportunity” relative to Wall Street’s expectations.


ELECTION UPDATE: CALL INVITE WITH CHARLIE COOK OF THE COOK POLITICAL REPORT

Hedgeye Potomac is hosting a call with Charlie Cook - one of the nation’s leading authorities on American politics and U.S. elections, and founder of the Cook Political Report.

 

Cook will share his outlook on the presidential race, discuss the state of play for House and Senate elections, and give a preview of the upcoming presidential debates later this month.

 

The call will take place TODAY, September 20th at 2:00 PM EST with prepared remarks from Cook followed by Q&A.

 

ABOUT CHARLIE COOK

 

Charlie Cook is the Editor and Publisher of the Cook Political Report and a political analyst for National Journal magazine, where he writes a twice weekly column. Charlie is considered one of the nation’s leading authorities on American politics and U.S. elections. In 2010, Charlie was a co-recipient of the American Political Science Association's prestigious Carey McWilliams award to honor "a major journalistic contribution to our understanding of politics." In the spring semester of 2013, Charlie served as a Resident Fellow at the Institute of Politics at the Kennedy School of Government at Harvard University.

 

Charlie founded the Cook Political Report in 1984 and became a columnist for Roll Call, the newspaper of Capitol Hill, in 1986. In 1998 he moved his column to National Journal. Charlie has served as a political analyst or election night analyst for CBS, CNN and NBC News and has been a frequent political analyst for all three major broadcast news networks and has appeared on Meet the Press and This Week.

 

The New York Times has called Charlie “one of the best political handicappers in the nation" and has said the Cook Political Report is "a newsletter which both parties regard as authoritative." The late David Broder wrote in the Washington Post that Charlie was "perhaps the best nonpartisan tracker of Congressional races," while CBS News' Bob Schieffer called the Cook Political Report, "the bible of the political community."

 

CALL DETAILS

 

Toll Free:

Toll:

UK: 0

Confirmation Number: 13645449


Did The Buyback Boom Just Go Bust?

Takeaway: After hitting a post-recession high, S&P 500 company share buybacks fell -6.8% y-o-y in the second quarter.

Did The Buyback Boom Just Go Bust? - bull1

is the tide turning?

 

Consider this. After hitting a post-recession high in 2Q16, FactSet reports today that S&P 500 buyback activity tumbled -6.8% year-over-year in 2Q16. 

 

Here's the key excerpt and chart from the FactSet data:

 

"Companies in the S&P 500 spent $125.1 billion on share buybacks during the second quarter, which marked the smallest quarterly total since Q3 2013. This comes after a first quarter that saw buybacks for the index hit a new post-recession high. Aggregate buybacks in Q2 represented a 6.8% decline from the year-ago quarter, which was the largest year-over-year decrease since Q1 2015. This Q2 decline came during a quarter that saw the S&P 500 index hit record-high price levels. On a trailing twelve-month basis, shareholder buybacks amounted to $592.9 billion at the end of the second quarter. This was a 6.8% increase from the same time period a year ago. The TTM buyback total at the end of Q2 marked the fourth largest amount going back to the start of 2005, despite this quarter’s decline."

 

Did The Buyback Boom Just Go Bust? - buyback 9 20

 

This dour question mark is a far cry from the headlines we saw just two months ago when the buyback boom was cited as justification for why the S&P 500 was hitting all-time highs. Indeed, as the Wall Street Journal wrote, "There's No Need To Fear the Buyback-Boosted Stock Market." 

 

We advised otherwise, here(Note: The S&P 500 is down -0.9% since then.)

 

***To understand why we think buybacks, corporate profits, consumer confidence, the labor market etc, etc, etc, are all past peak and U.S. growth continues to slow, watch this 6-second animated clip Hedgeye CEO Keith McCullough in "An Animated History of U.S. #GrowthSlowing" below.

 


HBI | What We Can Learn From ASNA Implosion

Takeaway: Average Co + Average Acquisition = Subpar Financial Performance. ASNA now. HBI is next in line in 2017. Mark your calendar.

We don’t care much for ASNA – and never really ‘got’ the whole value-play. We actually have grown to not like Retail value-stocks. They’re ‘value’ for a reason, which is not where you want to be in this environment unless the Street is overly penalizing the company for investing in its future (RH, NKE, DKS). ASNA is a good example of the former. We think HBI is next in line.

 

Here’s what we can all learn from ASNA:

 

a. Great example of ‘the calendar rule’ –  why you should mark your calendar for 12 months after we see a questionable acquisition.

b. It’s been just 5 quarters since ASNA bought and integrated Ann Taylor. We can finally see the real earnings power, and it’s not good. 12 months of first-year integration obfuscated the real earnings power of this company (ie it made it look too large).

c. The company missed the quarter by 50%, cut expectations by 24%, the super-bullish ‘buy rating’ ratio fell by 30%, and the stock is currently trading down 27%.

d. All this brings to question 1) ASNA’s ability to consummate deals, but more so, 2) Why it chose to do this deal in the first place. Great example of why defensive deals don’t win.

 

Hanesbrands is the king of defensive deals. It has made some of the most egregiously priced deals or questionable assets that we have seen in this economic cycle.  Will it implode this quarter? Probably not. But Rich Noll has 12 days left on the job. Mark your calendar for 3Q17 – or sooner.

 

LINK: Video Replay | HBI Black Book Presentation

 

LINK: HBI | Why Bloomberg is So Wrong on a VFC/HBI Deal

LINK: HBI | Press the Short


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.

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