Breaking Growth: Best short candidates
This particular model from Two Rivers identifies stocks where the growth narrative is called into question. It flags names with slowing growth, margin declines, earnings/sales misses, troubling working capital trends, poor estimate trends or lowered guidance, among other characteristics. These potential shorts typically carry moderate-to-high betas, time horizons of 3 to 12 months, higher valuations due to historically strong growth and are often “market darlings”. From ~40 flagged names, Garmin, Freshpet, SharkNinja and Sportradar are discussed in further detail.
Edition: 213
- 13 June, 2025
Consumer Discretionary
Another profitless prosperity stock - Tom Chanos sees no way to scale the business. FRPT has been unprofitable for 10 straight years, 2022 will make it 11. Margins are collapsing even with price hikes; burns cash like crazy (latest offering only buys them c.9 months); and much bigger competitors, no barriers to entry. Selling expensive pet food in a recession is a bad place to be. TP $25 (50% downside). Other short ideas initiated by Tom over the last year include Peloton, Carvana and Coinbase.
Edition: 139
- 08 July, 2022