What We're Reading ~ 10/23/19

Blackstone CEO's new book: What It Takes [Stephen Schwarzman]

Taking a look at Domino's [Timberwolf Equity Research]

Quick new interview with Peter Lynch [Fidelity]

Denise Chisholm on historical sector valuations [Barrons]

With DataXu buy, Roku unveils big ad ambitions [Digiday]

At Costco, everything resonates with the consumer [Retail Dive]

Disney, IP, and returns to marginal affinity [Matthew Ball]

Apple Pay and the future of mobile payments [PYMNTS]

Technical overview of Elastic (ESTC) [Motley Fool]

Inside Apple's long, bumpy road to Hollywood [Hollywood Reporter]

20 countries that will face population declines [Business Insider]

Lone Pine Capital Adds To Dominos Pizza Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding its stake in Dominos Pizza (DPZ).  Per the filing, Lone Pine now owns 5% of Dominos Pizza with over 2.07 million shares as of August 20th. 

This is up from the 1.24 million shares Lone Pine disclosed at the end of June when they established a new stake in the company.  DPZ shares have fallen from a high of $285 at the end of Q2 to recent lows around $226.

As a reminder, Steve Mandel stepped down from day-to-day management of the portfolio and handed those duties off to managers Dave Craver, Mala Gaonkar, and Kelly Granat (though others are also now listed on the SEC filings).

Per Yahoo Finance, Dominos Pizza "through its subsidiaries, operates as a pizza delivery company in the United States and internationally. It operates in three segments: U.S. Stores, International Franchise, and Supply Chain. The company offers pizzas under the Domino's brand name through company-owned and franchised stores. As of August 20, 2019, it operated through approximately 16,300 stores in 85 markets. The company was founded in 1960 and is headquartered in Ann Arbor, Michigan."

Mathew Klody Short Domino's: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Mathew Klody of MCN Capital who pitched a short of Domino's (DPZ).


Mathew Klody's Invest For Kids Chicago Presentation: Short Domino's

“Disruptors can be disrupted”.  Finding more shorts than longs right now.  The market seems to be a function of momentum, not valuation.   Look at the golden child > fallen angel phenomenon: Under Armour, Michael Kors, etc.

Patience is key – wait for the inflection point.  There is a shift coming for food. Domino’s (DPZ) is seen as a “disruptor” with strong comps/growth.   DPZ now has a demanding valuation and high leverage: >30x earnings, >20x EV/EBITDA, and 5.6x leverage.

Saturation? Management keeps moving the goalposts.  Declining international comps might be a sign.  Overexpansion? Pizza Hut finally turning the corner? Both would be a threat to DPZ.  Management uses high levels of debt to fund equity buybacks at ever higher prices.



For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

What We're Reading ~ 4/5/17

Modern Monopolies: What It Takes to Dominate the 21st Century [Alex Moazed]

How moats make a difference [Intrinsic Investing]

Boyar Research's thesis on QVC and Madison Square Garden [Barrons]

Autonomous cars and second order consequences [Benedict Evans]

The hardest question in portfolio management [A Wealth of Common Sense]

Diversification, adaptation, and stock market valuations [Philosophical Economics]

Noise: how to overcome the high, hidden cost of inconsistent decisions [Harvard Biz Review]

How Domino's built a $9 billion empire [Bloomberg]

How do winning consumer goods companies capture growth? [McKinsey]

Airlines make more money selling miles than seats [Bloomberg]

At Blackrock, machines are rising over managers to pick stocks [NYTimes]

What's next for malls? [Fashionista]

Andrew Ng on what AI can and can't do [Harvard Business Review]

Margin debt hit all time high in February [WSJ]

The 1% rule: why a few people get most of the rewards [James Clear]

Tiger Global Starts Domino's Pizza Stake

Chase Coleman's hedge fund firm Tiger Global has filed a 13G with the SEC regarding shares of Domino's Pizza (DPZ).  Per the filing, they now own 6.2% of the company with 3 million shares.

They started buying in the fourth quarter of 2016 and really ramped up their stake in the new year.  The filing was made due to activity on February 7th.

You can view the rest of Tiger Global's portfolio in the brand new issue of our newsletter.

Per Google Finance, Domino's Pizza is "operates pizza stores at 12,500 locations in over 80 markets. It operates through three segments: domestic stores, international franchise and supply chain. Its Domestic Stores segment consists primarily of its franchise operations, through which it operates network of over 4,820 franchised stores located in the United States. Its International Franchise segment consists of a network of franchised stores in approximately 80 international markets. Its supply chain segment operates approximately 20 regional dough manufacturing and food supply chain centers in the United States; a thin crust manufacturing center; a vegetable processing center, and a center providing equipment and supplies to certain of its domestic and international stores. Its basic menu features pizza products in various sizes and crust types. Its stores also offer oven-baked sandwiches, pasta, bread side items, desserts and soft drink products."

Hedge Fund Scout Capital Acquires Total Return Swaps on Domino's Pizza

James Crichton and Adam Weiss' hedge fund Scout Capital just filed a Form 3 and Form 4 with the SEC regarding their position in Domino's Pizza (DPZ).

On October 18th, Scout acquired various total return swaps with expiration dates of September 6th, 2012 and November 16th, 2012. The conversion/exercise price of these derivatives range from $23.38 to $28.94 and in all these swaps seem to represent over 750,000 shares. DPZ currently trades around $31.40.

The footnotes of the filings also indicate that Scout has now become a 10% owner of Domino's Pizza (DPZ) as a result of the company's buyback program.

For more from this hedge fund, head to Scout's presentation on Williams (WMB) and Sensata Technologies (ST) from the Value Investing Congress.

Per Google Finance, Domino's Pizza is "is a pizza delivery company in the United States. The Company operates its business in three segments: domestic stores, domestic supply chain and international. Its brands include the Domino’s Pizza, Domino’s HeatWave hot bag, Domino’s American Legends pizzas and Domino’s BreadBowl Pasta and Cinna Stix. Domino’s earns its revenue by retail sales at its franchise stores, which generate royalty payments and supply chain revenues to the Company. DPI’s also generates earnings through retail sales at its Company-owned stores."

Mark Massey's Hedge Fund AltaRock on Domino's, Mohawk Industries, & Carter's

Today we present an update from Mark Massey's hedge fund AltaRock. Since his inception as portfolio manager, Massey has seen a compound annual growth rate of 11.9%. And through the end of July, AltaRock was up 17.6% net for the year. While that obviously doesn't include the August volatility, it's certainly impressive.

Last year we posted up AltaRock's investing principles and received a ton of positive reader feedback about the piece. Since their letter was theoretical and practical in nature, the one question readers kept asking was: what are they invested in and why? Clearly everyone wanted to see these principles in practice.

Well today we're happy to share AltaRock's mid-year 2011 letter which walks you through their rationale with very in-depth write-ups on the following new additions to their portfolio: Domino's Pizza (DPZ), Mohawk Industries (MHK), and Carter's (CRI).

Massey writes that, "we invest with the mindset of a long-term business owner, and we seek superior businesses with durable competitive advantages."

Embedded below is the update (email readers please click this link to come read it: AltaRock's 2011 letter):



Be sure to also check out AltaRock's investing principles as it truly is an excellent piece.

Scout Capital Orders More Domino's Pizza (DPZ)

James Crichton and Adam Weiss' hedge fund Scout Capital Management recently updated its position in Domino's Pizza (DPZ). Per portfolio activity on February 23rd, Scout has now revealed a 5.07% ownership stake in DPZ with 3,040,000 shares.

This recent SEC 13G filing marks almost a 21% increase in their position size since the end of last year. At 2010 year-end, Scout previously owned 2,519,600 DPZ shares.

For other activity from the hedge fund, we've detailed some of Scout's other positions here. Signs of a 'fast food' theme are evident in Scout's portfolio as they also own Yum! Brands (YUM) and McDonald's (MCD), the latter in size.

Scout manages over $4 billion and was founded in 1999. Before founding Scout, Weiss worked at Dan Loeb's Third Point and earned his MBA from Columbia University and undergraduate degree from Harvard. Crichton previously worked at Zweig-DiMenna and earned his MBA at Harvard.

Per Google Finance, Domino’s Pizza, Inc. (Domino’s) is "a pizza delivery company in the United States. The Company operates through a network of 8,999 company-owned and franchise stores, located in all 50 states and in more than 60 international markets. It operates in three segments: domestic stores, domestic supply chain and international."