Rite Aid, Wrong Moves

Advertisement April 8, 2022 Good morning traders, Welcome back to The Daily Setup. Markets were up yesterday. Here’s what’s on the docket today: - Things don’t look good for Rite Aid - Warren buys into HP - Ketanji Brown Jackson is Confirmed to the Supreme Court Have a great weekend and we’ll see ya Monday. Nick How'd the markets look? Market Outlook Rite Aid makes the Wrong Moves Biggest Mover [Activision Blizzard, Inc. ]( A couple years ago, pharmacy chain Rite Aid (RAD) tried to pull off some sweet moves, expanding its locations in an effort to compete with rivals like CVS and Walgreens. Well they didn’t stick the landing and that little stunt saddled them with [$3.2B]( of debt. This has caused George Hill, an analyst for Deutsche Bank, to downgrade his RAD target from $16 to $1, sending the stock into freefall. Let’s hope Rite Aid management wears a helmet. - Shares in RAD dropped -17.18% Thursday to close at $6.99/share. Overall, the stock has lost ~56% YTD. - Hill surmises that for Rite Aid to continue operating they’ll need to generate [~$400M - $450M]( in annual EBITDA. - RAD is expected to post a [loss of 49 cents/share]( on revenue of $5.21B for the quarter through February. In the same period last year, they had a loss of 78 cents/share on revenue of $5.92B. The big date to watch will be April 14th, as that’s when Rite Aid will be posting their fiscal Q4 earnings and put forward their guidance for fiscal 2023. Hill believes that the retailer has largely been carried by pandemic-related services like testing and vaccines, but as demand wanes it’ll be hard to recoup. Regardless, the vultures are circling and they’re definitely hungry. HP is on the Buffet Street Stories [Cycling Downhill] After spending much of the early pandemic on the periphery, Warren Buffett and Berkshire Hathaway have begun to make moves. The latest object of interest? Tech hardware company HP inc (HPQ). On Thursday, Buffett announced the [purchase of 121M shares]( (~$4.2B), gaining an 11.4% stake in the company and becoming its largest shareholder. The news caused shares in HP to jump +14.75%, and the rest of us wishing we had jumped on those HPQ shares way sooner. - HP [lifted its annual profit outlook]( in late February, around the same time they agreed to purchase Poly for [$1.7B](, a bet on the hybrid work market. - As for the Oracle in Omaha, Berkshire announced plans to purchase insurance company Alleghany for [$11.6B]( and increased Berkshire’s stake in Occidental Petroleum last month. - Typically, Warren (can I call you Warren?) strays from tech stocks, but Berkshire’s stake in Apple has made him [billions]( (with a B) since heavily investing in 2016. Perhaps he sees a similar opportunity in HP. It seems within character for Buffett to sit out most of the pandemic, waiting for the time to strike. While HP certainly isn’t the industry leader that Apple is, there’s a good case that they’re currently undervalued. For example: HP currently has a price-to-earnings multiple of roughly 8.5x, which is well below competitor Xerox, who has a [PE of 12x](, all the while performing worse than HP during the pandemic. With that in mind, Buffett might anticipate a dislocation, especially if HP’s hybrid work play pays off. Sponsored by Family Investing Made Easy Family Investing App UNest, Launches [“Crypto for Kids”]( UNest just launched their[waitlist for UNest Legacy](, a simple and easy way to give your children the gift of crypto. By joining the waitlist you get: - [⌚]( Early access to UNest Legacy - 💎 Automatically entered into UNest Legacy’s weekly Ethereum giveaway* - [🖼️]( Entered into future UNest Legacy NFT giveaways* - [🆕]( Access to UNest Legacy Updates *Terms and Conditions apply [JOIN NOW]( *See Disclaimer Below Come on in, the metaverse is fine Token Talk [Token Talk] Hedera Hashgraph is [putting its money]( where the metaverse is, kicking off its latest venture fund with $250M in HBAR tokens. Hedera’s fund aims to lure B2C and business-to-business-to-consumer* firms into the world of Web3. It’s not a free-for-all however- Hedera is focused on projects centered around gaming, consumer brands, and sports. - Just a week ago, Hedera launched a “Crypto Economy Fund” aimed at driving [decentralized finance](. - Sayl, a customer relationship management (CRM) software, will be one of the first recipients of Hedera’s new fund money. With great technology, comes great responsibility, especially in Hedera’s case. Hedera works on a Directed Acyclic Graph, rather than blockchain, and critics worry that its approval process is too centralized. According to those critics, the DAG layout increases speed of transactions, but also potentially exposes Hedera to “bad actors,” and we’re not talkin’ Jared Leto. Slick moves Deals and Rumors [Deals and Rumors] Euronav is following the old adage, ‘if you can’t beat ‘em, buy ‘em’, and [plans]( to merge with rival Frontline in a deal worth $4.2B. The deal ties up two of the largest oil transporters in the world, and helps the combined company both cut costs and prepare for the transition to a low-carbon future. - Euronav owners get 59% of the new firm, and a cash dividend upon finalization, while Frontline ownership gets the remaining 41%. - On the news, Euronav shares climbed 9.5%, and Frontline’s fell 4.8%. - Euronav CEO Hugo De Stoop will be the CEO of the combined entity. The current tanker market is fragmented, and tanker owners have [felt the pain]( of the COVID pandemic slowing demand for oil and creating supply chain issues. The new company will command 10% of the current tanker market, and will benefit from tankers needing to take longer routes to deliver oil as they avoid the Russia-Ukraine crisis. As long as nobody gets stuck in the Suez Canal, it looks like smooth sailing ahead. Link Roundup Other News + “I Don’t Want to Play With You Anymore” - US revokes Russia’s ‘most favored nation’ status ([link]() + CDK Global Gets Snapped Up - $CDK jumps 11% after Agreeing to Being Acquired ([link]() + Who Sells Seashells? - Shell raises its Russia writedown to $5B ([link]() + Costco says “I Told You So” - Costco Jumps 4% After Strong March Sales ([link]() + Pfizer’s Shopping Spree - Acquires ReViral for $525M ([link]() + Motion Passed - Ketanji Brown Jackson is Confirmed to the Supreme Court ([link]() Meme Of The Day He did it, he really did it, [via @elonmusk]( [other news] 62 Calef Hwy #233 Lee, New Hampshire 03861 United States Questions or concerns about our products? Email our team here support@thedailysetup.com © Copyright 2022, [RagingBull]( - [Refund Policy]( - [Privacy Policy]( - [Terms & Conditions]( SPONSORED AD PLACEMENT: This email contains an advertisement by a party that is unaffiliated with Raging Bull. 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