Summary

Off Wall Street - Thor Industries

Off Wall Street discussed their shorting recommendation for on Thor Industries (THO), based on a thesis that THO is uniquely vulnerable to production capacity increases at rival companies, following a successive loss of market share in North America since 2017. OWS also suggests that THO’s backlog may not be realised, with dealers over-ordering with the right to cancel at no cost. Additionally, they suggest that THO’s recent acquisition of Airxcel is ill-timed and may prove costly. Moreover, OWS’s recent field trip to the chief manufacturing hub of the US RV industry in Elkhart County, Indiana, highlighted potential poor quality controls at THO and poor user experiences for RV owners. OWS suggests that the time to short THO appears imminent with consumer demand booming, elevated ASPs, increasing production capacity, growing dealer inventories, high margins, and stocks no longer responding to upside sales and earning surprises.

The Bindle Paper - Omega Healthcare Investors

The Bindle Paper’s short recommendation for Omega Healthcare Investors (OHI) is based on their view that Omega’s dividend is in doubt. Omega faces a series of challenges that support The Bindle Paper’s recommendation. These include increased tenant expenses; 3 operators refusing to pay rent as of 09/11; operators amounting to 16.1% of revenue have EBITDAR coverage <1x; occupancy levels have fallen from 85% to around 70%; and finally, Omega’s dividend has been substantially uncovered for at least the last 5 years.

Favus International Research

Favus International Research’s short recommendation for Ascendis Pharma (ASND) is based on the alarming toxicity of its sole commercial drug TransCon GH. They suggest that this will make EMA approval challenging, despite recent approval by the FDA. Not least, they suggest there is no unmet medical need for this type of drug and thus no regulatory pressure for approval. Additionally, Ascendis has experienced numerous senior management departures over recent years, which Favus suggests is a red flag.

280first

280first’s short recommendation for the Walt Disney Company (DIS) is based on the company’s potential lowering of its direct-to-consumer (DTC) business price. This recommendation arises from added language on the highly competitive nature of DTC and pricing pressure in the company’s filings. Indeed, their most recent filings indicate that their DTC strategy may not be successfully executed, and the challenges facing its DTC business “may require us to lower our prices or not take price increases to attract or retain customers.”

Badger Consultants - Peloton

Peloton's management cut revenue guidance for the following quarter and full year by 15%, but Badger Consultants puts a high probability on Peloton (PTON) missing revenue targets despite downward revisions. Badger digs into the fundamentals of Peloton’s business model deeming it structurally unprofitable. It all boils down to the fundamentals: Beyond Peloton reporting dismal quarterly results, which included its lowest revenue in 3 years, there are growing signs that demand is weak and net subscriptions for the company are down. Worryingly, sales and marketing expenses have risen tremendously and are generating proportionally less revenue and the cost of goods sold is expected to increase substantially which will eat into gross profits and margins. Another telling sign of trouble comes from the fact that Peloton’s operating expenses are rising rapidly as revenue growth declines. The compounding headwinds definitely pose a threat to the company going forward.

Channel Dynamics - Whirlpool

Over the course of the pandemic, US-based product manufacturers have benefitted from the robust surge in home remodelling and construction activity. Manufacturers have had the opportunity to expand margins and make businesses more profitable - including Whirlpool Corporation (WHR), a multinational home appliance manufacturer. However, competitive headwinds are rising and with the underlying market expected to soften, Whirlpool’s 5-6% revenue growth ambitions will prove to be increasingly difficult. Headwinds blowing the way of Whirlpool can be categorised into four buckets: The first being persistent cost inflation, which threatens to eat into profit margins. Second, following the pandemic-driven demand surge, the normalisation of consumer demand will cause an upset to growth targets and as supply chain issues persist, the rising imbalance of inventories points to an increasingly challenging environment for manufacturers. Thirdly, Whirlpool’s is likely to lose market share on the back of competing manufacturers aggressively increasing promotional activity. This feeds into the final category of capacity expansion, where Whirlpool’s expansion strategy dims in comparison to major competitors. The key running theme is that sentiment around Whirlpool remains negative, as they are out of touch with the independent dealer channel and are losing incremental builder business.

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