L/S Investing Ideas William McLane & Max Howard Substack: https://xitter.cf/t.co/JoHYx51jYu Contact: [email protected]

Joined April 2026
Credit Capital retweeted
*STARBUCKS FALLS TO LOW OF THE DAY FOLLOWING TWITTER POST BY WELL ARTICULATED SHORTS AT @CreditCapi
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Now this right here is proper analysis. $SBUX
We are short $SBUX with a PT of $70.76 and a 27% projected NTM IRR with 2.8x R/R. The Street believes Brian Niccol’s “Back to Starbucks” turnaround is a success, extrapolating accelerating SSSG into sustained demand and normalized margins. We disagree. Our geospatial imagery analysis, calls to 300 stores, scrape of 1.2M store-week operating-hour posts, permit filing analysis, scrape of 10,082 Glassdoor employee reviews and 80,777 Google reviews, credit card and foot traffic data covering 150M Americans, and survey of 293 customers reveals that 1) store closures are disproportionately concentrated in trade areas where demand can be transferred to nearby Starbucks locations, inflating SSSG by 483 bps, 2) Emerging beverage brands are increasingly locating directly within Starbucks’ trade areas, with competitor openings associated with 8-10% declines in Starbucks traffic, and 3) the Street erroneously models margins reverting to 2022 peak levels despite shops being drastically understaffed, all while employee sentiment declines precipitously. Our thesis is threefold: 1. Under Brian Niccol’s “Back to Starbucks” plan, Starbucks closed 627 North American company-operated shops in Q4 2025. Since then, SSSG has accelerated from 1.0% to 7.9%, which the Street views as sustained organic growth continuing into FY2027. We believe management has materially understated the customer transfer impact from store closures on transaction growth, with our analysis showing ~483bps of inorganic transaction tailwinds ending after this quarter, most of which management claims is organic. 2. Starbucks has historically dominated the U.S. specialty coffee and drive-thru beverage market. However, its competitive landscape is rapidly changing, as emerging brands ($BROS, 7 Brew) scale into Starbucks’ core markets. Our channel checks indicate 7 Brew will deliver 60%+ unit growth over the next two years, with 500 and 900 openings in FY2027 and FY2028 respectively, while Dutch continues to grow at 17%+. Our analysis of leasing documents shows that 73% of these emerging brand stores are scheduled to open within a mile of a Starbucks, which based on foot traffic alternative data has historically led to 8-10% volume declines at similar locations. 3. In FY2022, Starbucks averaged 26.8 employees/store before cutting North America employees/store to a trough of 19.8 in FY2024, well below competitors’ staffing. Despite Starbucks’ $500M labor investment, which has since increased employees/store to 21.3 in FY2025, we believe Starbucks’ current staffing levels are unsustainable as it adopts a more service-intensive operating model. Valuation: We model 483 bps of closure-driven SSSG unwinding as Starbucks laps the FY2025 closure cohort, with 181 bps of offset from the FY2026 cohort. This, combined with increasing competition, drives North American SSSG 174 bps below consensus in our base case and 286 bps in our bear case. This steps up by another ~280/420 bps respectively in FY 2028 as the 181 bps tailwind is lapped and competition intensifies. We model labor intensity remaining structurally elevated, forecasting Starbucks increasing employees/store from 21.3 to 24.0 through FY2027, driving FY2027 EBIT margins 263 bps below Street projections. Utilizing a conservative 18.5x/18.5x/20.0x NTM EBITDA multiple on FY2028 EBITDA, our bear/base/bull cases yield price targets of $48.48/$73.39/$113.95, respectively. Weighted at 35%/50%/15%, this yields a weighted average price target of $70.76. An in-depth breakdown of our primary research and full theses, along with a catalyst path will be published tomorrow.
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Credit Capital retweeted
Good analysis. We too are short $SBUX
We are short $SBUX with a PT of $70.76 and a 27% projected NTM IRR with 2.8x R/R. The Street believes Brian Niccol’s “Back to Starbucks” turnaround is a success, extrapolating accelerating SSSG into sustained demand and normalized margins. We disagree. Our geospatial imagery analysis, calls to 300 stores, scrape of 1.2M store-week operating-hour posts, permit filing analysis, scrape of 10,082 Glassdoor employee reviews and 80,777 Google reviews, credit card and foot traffic data covering 150M Americans, and survey of 293 customers reveals that 1) store closures are disproportionately concentrated in trade areas where demand can be transferred to nearby Starbucks locations, inflating SSSG by 483 bps, 2) Emerging beverage brands are increasingly locating directly within Starbucks’ trade areas, with competitor openings associated with 8-10% declines in Starbucks traffic, and 3) the Street erroneously models margins reverting to 2022 peak levels despite shops being drastically understaffed, all while employee sentiment declines precipitously. Our thesis is threefold: 1. Under Brian Niccol’s “Back to Starbucks” plan, Starbucks closed 627 North American company-operated shops in Q4 2025. Since then, SSSG has accelerated from 1.0% to 7.9%, which the Street views as sustained organic growth continuing into FY2027. We believe management has materially understated the customer transfer impact from store closures on transaction growth, with our analysis showing ~483bps of inorganic transaction tailwinds ending after this quarter, most of which management claims is organic. 2. Starbucks has historically dominated the U.S. specialty coffee and drive-thru beverage market. However, its competitive landscape is rapidly changing, as emerging brands ($BROS, 7 Brew) scale into Starbucks’ core markets. Our channel checks indicate 7 Brew will deliver 60%+ unit growth over the next two years, with 500 and 900 openings in FY2027 and FY2028 respectively, while Dutch continues to grow at 17%+. Our analysis of leasing documents shows that 73% of these emerging brand stores are scheduled to open within a mile of a Starbucks, which based on foot traffic alternative data has historically led to 8-10% volume declines at similar locations. 3. In FY2022, Starbucks averaged 26.8 employees/store before cutting North America employees/store to a trough of 19.8 in FY2024, well below competitors’ staffing. Despite Starbucks’ $500M labor investment, which has since increased employees/store to 21.3 in FY2025, we believe Starbucks’ current staffing levels are unsustainable as it adopts a more service-intensive operating model. Valuation: We model 483 bps of closure-driven SSSG unwinding as Starbucks laps the FY2025 closure cohort, with 181 bps of offset from the FY2026 cohort. This, combined with increasing competition, drives North American SSSG 174 bps below consensus in our base case and 286 bps in our bear case. This steps up by another ~280/420 bps respectively in FY 2028 as the 181 bps tailwind is lapped and competition intensifies. We model labor intensity remaining structurally elevated, forecasting Starbucks increasing employees/store from 21.3 to 24.0 through FY2027, driving FY2027 EBIT margins 263 bps below Street projections. Utilizing a conservative 18.5x/18.5x/20.0x NTM EBITDA multiple on FY2028 EBITDA, our bear/base/bull cases yield price targets of $48.48/$73.39/$113.95, respectively. Weighted at 35%/50%/15%, this yields a weighted average price target of $70.76. An in-depth breakdown of our primary research and full theses, along with a catalyst path will be published tomorrow.
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Credit Capital retweeted
Our latest piece, a short thesis on $BE. crossroadscap.io/insights/bl…
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OUR NEW SHORT: $GIL We are short Gildan Activewear, a basic apparel manufacturer based in Canada and listed on both the NYSE and TSX. Below is just a summary of some of our opinons about this company; for the full short thesis, including endnotes and our very important disclaimer about our financial interests and how they work, please see the Jehoshaphat Research website. 1) Our forensic analysis concludes that GIL’s “true” organic growth is negative and has been for years, contrasting sharply with its appearance of revenue growth. This underlying decline has been obscured by financial engineering. 2) In our opinion, GIL has been “stuffing” its distributors and other customers with product far in excess of underlying end user demand. This, in our analysis, has led to an overhang of product worth around half a billion dollars, and this contrasts with consensus Street forecasts for 2026 that don’t make sense. The acquisition of Hanes presents additional challenges, too many to list here but detailed in our thesis. 3) Former employees and distributors report aggressive, concerning practices such as ones that “compel the distributors to bring forward some purchases,” or offering extended terms at quarter-ends to “move sales from Q2 to Q1,” etc. These quotes are provided in context in our thesis. 4) We believe this misleading picture of organic growth started to form around 2024, following the mass resignation of the GIL board of directors. Is that a coincidence, or is the new Board less interested in policing Management than the old Board? We always leave some of the more interesting things for readers of the full opinion, so we encourage you to visit our website and download the PDF of our short thesis, paying attention as well to our very important disclaimer. Comments and corrections welcome at our website or our email address.
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Credit Capital retweeted
$F announced they would get into the battery storage business on May 18th and the stock has gone up everyday since the announcement. Adding 40% or $20B to their market cap. Batteries, and energy grid systems have plenty of public comps, so we can use Tesla mega pack 3 as the economic framework (even though they are at more scale and a much better manufacturer and being doing this for years but lets give ford the benefit of the doubt). Tesla generated 3.9B on 14 GWH in Q4 and 2.2B on 8.8 GWH in Q1 26'. With a 30% gross margin. Ford at full scale after a $2B investment is hoping in 2028 (yes no deliveries or revenue until 2 years from now) to generate 20 GWH a year in production. If pricing held at todays levels and giving them $TSLA manufacturing margins that would equate to 3-5B$ a year in revenue for Ford. And a 1-1.5B$ gross margin business (this is in-line with analyst estimates I have seen). Ford has done around 1.5B in gross profit over the past few years. So at most this "new" hot ai business will increase their gross profit dollars 6-10%. And thats to assume they fill the full demand in 2028, be as efficient as Tesla and see no pricing degradation from now to then (Tesla has a new 60 GWH facility coming online in Houston in a few months), the history of batteries has not been kind to pricing its a game of efficient manufacturing and enormous scale to succeed....two things that Ford has not been or done in generations and does not have the balance sheet to get there to compete against the asian manufacturers and Tesla. So $F is now ai, but an actual grounding and understanding of this new business and materiality to their earrings says its incremental at best. I know facts won't matter until the cycle is over, but the air being put under names so afar from the center of AI is scary for when reality ultimately strikes
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Credit Capital retweeted
Such common sense, so refreshing to see, and unfortunately so rare
$OTCM Coulson on the fallacy of "one-time" expenses:
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Credit Capital retweeted
This is awesome! Let’s keep grinding! @Hedgeye
Replying to @Hedgeye
I learned about Hedgeye and @HedgeyeFood from a team at a stock pitch competition covering $CAVA. My biggest win was shorting $FWRG into the print last Q driven by deteriorating unit economics, decelerating SSS, and tougher comps. Read @HedgeyeFood preview and doubled down. More recently I've been long $CAVA/short $CMG with some exceptional analysis by Bennett on the experience/brand image difference.
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