Below is a brief note from our Restaurants team on why they removed long Cheesecake Factory (CAKE) from among their Best Ideas:
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CAKE: Removing from the Best Ideas list as a LONG (operational nightmare / competitive intensity) CAKE’s outperformance for the past 6-months has little or nothing to do with the company’s operational performance. We speculated the company should be taken out and that has not materialized. While it still may happen, the company’s inability to drive incremental traffic in this environment will only get worse. |
Below is a brief note from CEO Keith McCullough on why we're adding McDonald's (MCD) to the short side of Investing Ideas today:
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Looking for more companies on the short side that are trying to take price to offset rising wage and commodity costs in their P&L? How about having #StrongDollar as a headwind to international earnings? Howard Penney just went bearish on a name he's liked (and Wall St. loves) for a long time = McDonald's (MCD). Here's an excerpt from Howard's recent Institutional Research note on MCD: "MCD is going the wrong way on menu items and value. They did a great job reducing complexity in 2015 and it yielded positive results, but as cycles go, they are reverting to their past mistakes. Value wins in the restaurant space, and MCD has been a mainstay in the category, keeping their check average well below the sandwich segment average, but in 2017 with the introduction of premium items we saw a notable decline in the spread between MCD and the segment average..." Sell the bounce to lower-highs, KM |
