#$tfm

[dragonflycap]

Naturally, unified on a view to buy United Natural Foods

Healthy food, be it Organic or Natural has been mainstream in shopping and chains like Whole Foods Markets, $WFM, and the Fresh Market, $TFM for years.  But you might not know that the leading supplier of Natural and Organic products to these stores is United Natural Foods, $UNFI.  It is time to get to know them.

United Natural Foods stock price pulled back from a high at the end of February, like the grocers it serves.  With a gap down on strong volume after reporting earnings in July, it started to settle after about a week.  Since mid-August it has drifted higher in that consolidation.

Now the Bollinger Bands® are turning up, pointing to further upside.  The momentum indicators RSI and MACD are also supportive of more upside and bullish.  The stock price is back to where it started the last gasp lower at 50.50 and over the 20 day SMA.  Above that the falling 50 day SMA looms at about 52 and then a gap to fill up to 62.30.  Support lower stands at 47 and 44.50.  A move into the gap could trigger some short covering and a possible squeeze with over 8% short interest in the stock.

More at Dragonfly Capital

[alphaattribution]

Scopia Management returns an estimated 4.43% for May

Scopia Management Inc returns an estimated 4.43% for May 2015 - the fully hedged version returns 2.42%

Scopia Management Inc generated a 4.43% return on their publicly disclosed long portfolio for the month ending May 2015, outperforming the S&P500 by 442 basis points (bp). On a hedged basis, the portfolio would have returned 2.42% StockAlpha over the same period. Scopia's StockAlpha reflects the net return if each security in their portfolio was hedged with a sector ETF, such that the resulting portfolio was market, beta and sector neutral. StockAlpha in the Industrials sector contributed the most to StockAlpha during the month.

Positive Contributors to Scopia's Returns

Scopia’s position in Spirit Aerosystems Holdings Inc. Class A (SPR) contributed the most to the performance of the manager’s long-portfolio during the month. Over the month of May 2015, Scopia's 26.9% position in Spirit Aerosystems Holdings Inc. Class A (SPR) increased in value by 7.1%, contributing 1.91% (26.9%*7.1%=1.91%)to the long portfolios overall return. Looking at Scopia's portfolio through a fully hedged StockAlpha lens, the holding of Spirit Aerosystems Holdings Inc. Class A (SPR) also provided the largest contribution to fully hedged returns. Spirit Aerosystems Holdings Inc. Class A (SPR) returned 7.1% during the month compared to the Industrials sector, which returned 0.3%. As a result, after taking into account Spirit Aerosystems Holdings Inc. Class A (SPR)'s beta relative to its sector, the position contributed 1.8% of StockAlpha to the Scopia’s monthly performance.

Negative Contributors to Scopia's Returns

Much of the drag on Scopia’s long-portfolio during the month can be attributed to the holding of Aegerion Pharmaceuticals Inc (AEGR). Over the month of May 2015, the manager's 3.3% position in Aegerion Pharmaceuticals Inc (AEGR) returned -14.4%, contributing -0.47% (3.3%*-14.4%=-0.47%)to the long portfolios overall return. Looking at Scopia's portfolio through a fully hedged StockAlpha lens, the holding of Aegerion Pharmaceuticals Inc (AEGR) also provided the most negative contribution to fully hedged returns. Aegerion Pharmaceuticals Inc (AEGR) returned -14.4% during the month compared to the Health sector, which returned 4.5%. As a result, the position contributed -0.6% of StockAlpha to the manager’s monthly performance.

Overlap with other hedge funds

Of Scopia’s top 10 largest positions, Fresh Market Inc. (The) (TFM) is the name that is owned by most other hedge funds. 3.7% of hedge funds within Symmetric's universe had a position in Fresh Market Inc. (The) (TFM) as of March 31, 2015, making it a contrarian name relative to other stocks, even though it is the most consensus within the manager's top positions. Scopia initiated its position in Fresh Market Inc. (The) (TFM) 0.75 years ago. Other hedge funds that have significant ownership stakes in Fresh Market Inc. (The) (TFM) include Flowering Tree Inv Mgmt Pte Ltd (32.3% position initiated 2.3 years ago), Joho Capital Llc (16.2% position initiated 2 years ago) and Ashmore Group Plc (15.1% position initiated 0 years ago). Overall, Scopia's book is contrarian, with the average position held in the portfolio held by 8.1% of hedge funds. Screen, monitor and bechmark hedge fund managers at Symmetric.io

[hammerstone]

As expected, stock markets weren’t too volatile...

...trading mixed most of the session (NASDAQ holding at new all-time highs), as markets remain complacent holding at record levels. U.S. consumer prices rose for the third straight month in April, the latest sign inflation is stabilizing, while Fed Chair Yellen said today in a speech that the central bank is on track to raise interest rates sometime this year. Even with those two key factors, equities were little changed, as volume was anemic, and major averages traded in a fairly narrow trading range ahead of the Memorial Day Holiday weekend. The dollar surged, bonds slipped, and commodity prices were generally lower to end the week. Transports slipped again, led by weakness in airlines.

HammerstoneReport Closing ReCap -5/22/15

[dragonflycap]

A clear way to trade Fairway

Grocery stocks gathered some strength towards the end of 2014, but as the holidays ended so did the strength.  Many are just stagnating.  You might think the better word for a grocery store would be rotting.  But that is not the case.  These stocks are not falling fast.  Some minor pullbacks, or sideways consolidation of the latest move up.  The favored term is a 'healthy pause.'  But who wants to own a pause?

There is one stock in this space that is showing some sings of a Spring awakening though.  Fairway Group ($FWM) has been that younger sibling in the grocery space.  Following the others, with a bit of a lag.  But the chart below suggests it is ready to come out of the shadows.

Fairway started 2015 with a move higher but then consolidated the move beginning in mid February.  The difference between it and Whole Foods ($WFM), The Fresh Market ($TFM) and Natural Grocers by Vitamin Cottage ($NGVC) though is that it is breaking the consolidation to the upside.  Time to get on board!  The rising RSI in the bullish zone and the MACD crossed up and rising support the breakout continuing.

The break of the channel targets a Measured Move higher to 8.65.  That is a lot of bananas.  Using a stop under 6 gives a really good reward to risk ratio going forward.  No coupons needed.

More at Dragonfly Capital

[jamielissettehammerstone]

Another record setting day again on Wall Street

...as both the S&P 500 and the Dow Jones Industrial Average posted solid gains after China's surprise interest rate cut and remarks from ECB President Mario Draghi on additional stimulus – lifting major averages globally. Markets ended higher for a 5th consecutive week, with CNBC noting it was the best 5-week rally in the S&P since 2009.

It was a broad sector rally given the news out of Europe and Asia, but markets faded from the open, closing off the highs. Emerging markets jumped, led by Brazil, with its ETF (EWZ) up as much as 7%, led by shares of PBR as stock rebounds. European markets ended strong, rising more than 2.5% for the DAX and Cac 40 Macro Stories.

HammerstoneReport Closing ReCap 11/21/14

[skrisiloff]

Can organic food maintain a premium margin?

We’ve come to think of organic foods as higher priced and higher margin than other types of groceries, but that may be starting to change.  On Kroger’s earnings call last week, the company’s CFO noted that natural and organic foods may not be able to maintain their premium margins forever.

“Margins I tell you what, there’s more margin pressure now on natural and organic than there’s ever been. It seems that it’s becoming more and more of a competitive category. And so although margins tend to be better in natural and organic, I don’t know that’s going to continue for the foreseeable future.”

This would be a big shift in the natural foods market, and may be indicative of the fact that the mainstream adoption of healthier diets is changing the landscape of the formerly niche industry.  High margins and strong demand have attracted competition, and as organic options become more widespread, the products may struggle to avoid being commoditized.

On the other hand, I can see a couple of reasons that organic food would be able to maintain its price/margin premium over time.  1) if organic foods are more expensive because crop yields are lower (e.g. more losses without pesticides, GMOs), then it would make sense that an organic product would be more expensive than a non organic product because the costs per unit of production are higher 2)  Margins may be defendable because there is a heavy trust factor involved in an organic purchase.  Consumers have to be able to trust that the vendor has made decisions with its supply chain that protect the customer’s dietary values.  This lends itself to branding, which is one of the best ways to protect margin.