Short-seller Jim Chanos revealed Thursday on CNBC that he is betting against two fast-food shares.
“We’ve been short these things for about a year,” stated Chanos, who’s recognized for his previous early adverse calls on Enron and Tyco.
On Thursday’s information, shares of Dunkin’ noticed an preliminary 5 p.c spike decrease in premarket buying and selling earlier than recovering these losses. Dunkin’ had been up earlier than Chanos’ feedback.
Shares of Restaurant Brands — proprietor of Burger King, Tim Hortons and Popeyes Louisiana Kitchen — sank about three p.c on the information and then pared a few of these declines.
In making his case, Chanos stated price-to-earnings ratios for restaurant shares have been going “higher, higher and higher as restaurants themselves have struggled.”
“At some point, that has to come to an end,” he stated.
“This is part of a broader theme, … the franchisers versus the franchisees,” Chanos stated. He stated he would not like what he calls “this asset-light idea” of those firms not proudly owning their eating places whereas “basically clipping the coupons, collecting royalties” from the franchises.
“We’re also short a number of these asset-light models,” he stated, however he didn’t reveal any names past Restaurant Brands and Dunkin’.
Dunkin’ Brands on Thursday reported adjusted quarterly earnings of 62 cents per share — 9 cents higher than expectations. However, income of $301.three million fell in need of estimates.
Shares of Dunkin’ — proprietor of Dunkin’ Donuts and Baskin-Robbins — have been three.5 p.c decrease in 2018, however have been about 13.three p.c larger up to now 12 months as of Wednesday’s shut.
Restaurant Brands stated Tuesday that adjusted quarterly earnings have been 66 cents a share — 10 cents larger than estimates. Revenue of $1.25 billion additionally beat expectations.
Shares of Restaurant Brands have been 10.7 p.c decrease for 2018 and have been down about 6 p.c up to now 12 months as of Wednesday’s shut.
Neither Restaurant Brands nor Dunkin’ Brands have been instantly out there to answer CNBC’s requests for touch upon Chanos’ interview.
Kynikos Associates, with greater than $2 billion in property underneath administration, noticed its short-only fund down 12 p.c final yr, in line with sources conversant in the matter. Kynikos’ hedge fund was up 22 p.c final yr, sources stated, including each funds are about flat in 2018.