Sohn New York Idea Contest Winner: Short Lamb Weston

We're posting up notes from the Sohn New York Investment Conference.  Next up is the Sohn idea contest winner who presented a short of Lamb Weston (LW).

Sohn Idea Contest Winner: Short Lamb Weston

•    Lamb Weston(LW) – (Short idea) Lamb will miss estimates by 30% to 40% in next few years as margins are at peak.

o    Buys potatoes and sells them as french fries to restaurants.
o    Lots of new supply coming online. Was an unexpected boom in demand which sent margins in the business way up but a supply response is coming
o    People don’t realize that their current pricing power is cyclical and not secular. Stock is priced like a consumer staple
o    Would cost $5 billion to recreate Lamb’s assets. Company's EV is well more than double that


Be sure to check out the rest of the Sohn New York conference presentations.