TSOH Weekly Roundup (04/17/26)
TSOH Weekly Roundup #3
Welcome to the third edition of the TSOH Weekly Roundup, which will be in your email inbox each Friday at 11am ET. Each update features a Chart of the Week and a brief discussion on three news items relevant to the TSOH investable universe. If you have feedback on this format, please let me know.
Chart Of The Week
As discussed in yesterday’s update, Chipotle’s comps have decelerated to levels only seen during the pandemic and the 2015 / 2016 health safety issues. In turn, margins have come under pressure, earnings estimates have been reduced, and the stock has been cut in half. Chipotle is one of many fast food / fast casual chains navigating near term pressure and a lower stock price; I suspect that a few attractive long-term opportunities lie among them.
Three Notable Items
“Peloton’s Latest Leader Thinks He Can Coach It Back to Health”
In Q2 FY19, Peloton had ~362,000 CF subscribers; seven years later (as of Q2 FY26), the tally is ~2,661,000, with the sub base up ~33% p.a. over that period. The issue, which explains why the stock price has plummeted >95% from the highs, has been the roller coaster ride along the way (and strategic decisions made under the leadership of co-founder John Foley). At recent prices, a successful investment required little more than expense efficiency and subscription stabilization; growth, if realized, would be icing on the cake.
“If we look at the subscriber dynamics, we’re not that far off from where we were at the absolute peak of the pandemic - which is remarkable because no one could exercise any way other than at home… That was an unrealistic valuation for the company [when the market cap reached ~$50 billion in mid-2021]. I would argue that the valuation we have now is also unrealistic.”
“Pershing Square Holdings Annual Investor Meeting”
The Pershing Square Holdings annual meeting featured commentary from the investment team on a number of companies in the TSOH investable universe, including Chipotle, Meta, and Nike. I’m interested in their thought process and portfolio decision-making given our similar investment styles.
“Nike was a mistake… We did not understand how much the prior CEO had really damaged the business, and how heavy the turnaround was going to be. Our EPS estimates continued to come down. We decided the turnaround would take a lot longer and that we did not have as much confidence that it would achieve the high levels that we initially thought… We moved on… Nike was an investment we lost ~30% on during our year and a half of ownership.”
“Sazerac Offered to Buy Brown-Forman for Around $15 Billion”
The latest development at Brown-Forman: a $32 per share offer from Sazerac, with Pernod Ricard confirming deal talks are “ongoing”. For context, Brown-Forman repurchased ~$800 million of its stock over the past three years at an average price of ~$38 per share – inclusive of ~$400 million in FY24 at an average price of ~$58 per share. If there’s a deal to be made here, I would be quite surprised if it was at the price of ~$32 per share.
“Sazerac recently approached the Jack Daniel’s maker about a potential deal. The interest comes as Brown-Forman has been in deal talks with French spirits-maker Pernod Ricard. Sazerac offered $32 a share, the people said. Brown-Forman’s shares were trading above $28 midday Wednesday, having run up roughly 25% since the reports of the takeover interest began.”
TSOH Updates
Here’s the updated TSOH research list for the past six months:
Monday’s post will be an update on Netflix (NFLX), which reported Q1 FY26 results yesterday afternoon. I’ll dig into the recent financials, along with some updated thoughts on the path ahead for the global leader in DTC SVOD following their failed attempt to buy Warner Bros. (to me, the better outcome).
Have a great weekend!
NOTE - This is not investment advice. Do your own due diligence.
I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.