Short Big Mac and other burgers

H

heilbronner

Just shorted MCD @ 26.16. This will be a position trade.
MCD is up in a big way, but this is a mature, mature business with no innovation at all. P/E is about 32 which is quite much for the very slow growth rate of MCD.
 
I was reading that they have cut store growth substantially. So the remaining will pick up more biz. No link for you, sorry.

Good luck!
 
Quote from ChrisRT:

They still trying to spin off Donatos and Chipotle? I haven't kept up on this company other than technicals.
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Sorry I'm no insider. But technicals may give you hints.

What might be true: Buy the rumor sell the fact.
IMHO there is also some truth to: Sell short the rumor and cover lower after the fact.
 
I wasn't looking for trade ideas...I was looking for an update on this. These weren't rumors..they were reported as looking to do this late last year...I just haven't heard updates.
 
Quote from heilbronner:

Just shorted MCD @ 26.16. This will be a position trade.
MCD is up in a big way, but this is a mature, mature business with no innovation at all. P/E is about 32 which is quite much for the very slow growth rate of MCD.
More...


You are shorting restaurant business. No matter the economy, people will always eat out and especially at low end restaurants. If anything, MCD might pick up as the average Joe Shmoe will have to cut down on "fine dining" like Outback and Ruby Tuesdays.

I thought you were going to mention beef prices, but I doubt even those would affect the buying power of MCD.

But if anything, you won't get hurt on your position.
 
Be careful shorting MCD. True value is locked up in real estate and not reflected on their balance sheet. They own most every decent corner in America. Slowed restaurant growth means reduced capital expenditures and the ability to increase dividends.
 
I would short Burger King more than McDonalds.
Now that is a chain that looks like it is going in the toilet.
Worst set of resturants I have ever seen.
 
Quote from Hurricane:

Be careful shorting MCD. True value is locked up in real estate and not reflected on their balance sheet. They own most every decent corner in America. Slowed restaurant growth means reduced capital expenditures and the ability to increase dividends.
More...

Great post. I wish I'd been in tune to the possibilities when the stock was in the low teens. MCD was as close to a Graham/Dodd/Buffet play as you can get. When the market cap was 15b, the value of MCD's real estate minus debt allowed investors to own the business itself for el cheapo. I agree that P/E is an inappropriate measure of this companies value.
 
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