EVENTS:   Semiconductors: Bubble Burst or Bear Market Trap? - David Scott/CHA-AM Advisors - 17 Sep 26     ROADSHOWS: US, European and Asian Equity Short Ideas - Robert Prather /Vision Research   •     15 Sep - 08 Oct 26      
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Consumer Discretionary

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Brian McGough thinks the brand is growing too quickly and outright recklessly. ONON’s model reminds him of when Kors blew up in 2015 - it sold indiscriminately into wholesale, resulting in discounting, and a slowdown in high margin DTC sales. Brian also thinks the situation is reminiscent of early cycle Under Armour which was billed as “the next Nike”. At least UAA was a real brand, he is not convinced ONON is. To date, the company has managed to keep discounting to a minimum, however, this will change in 2023 as 190% inventory growth flows through the channel. Brian sees 50% downside and would pair a short position here against longs in Deckers and NKE.

Edition 158 - 14 Apr 23