They have indeed. We also highlighted the fact that as Live Cattle prices rise, certain companies that purchase and use large amounts of beef generally have an inverse price relationship to beef prices. In our note to subscribers we singled out the stock of Burger King Worldwide (BKW) as a potential short candidate.
Our analysis was that BKW may feel pricing pressure as beef costs rise. In addition the “Have it your way” fast-food burger joint is struggling against formidable competition from many fast growing and mammoth restaurants in its class. Also, there is a tendency for fast-food clientele to opt for grilling up their own burgers over the summer in lieu of going to the restaurant. BKW was added to the Almanac Investor Stock Portfolio as a short when its slower-moving 12-26-9 MACD histogram turned negative on June 24 with a 10% stop loss.
iPath DJ-UBS Livestock Sub-Index ETN (COW) is a bit thinly traded, but it seems to be the only well-correlated equity vehicle to Live Cattle. The underlying index that COW tracks is comprised of about 65% Live Cattle and 35% Lean Hogs. Caution should be taken with COW. This Exchange Traded Note, like other unsecured debt securities with no principal protection, carries inherent risk and the risks with COW may be greater. PLEASE READ THE PROSPECTUS, CONSULT YOUR FINANCIAL ADVISOR AND CONDUCT YOUR OWN DUE DILIGENCE. COW was added to the Almanac Investor ETF Portfolio on June 11 at 26.65 with a buy limit of $27.00 and a stop loss of $25.00.
The charts below show Live Cattle compared to BKW and COW, BKW price and MACD as well as a BKW Point & Figure chart using a 1%/box 3 box reversal chart. Click charts to enlarge...
Live Cattle (LC) Daily Bars & Burger King (BKW) Closes &
iPath DJ-UBS Livestock Sub-Index ETN (COW) Closes
Burger King (BKW) Daily Bars & MACD
Burger King (BKW) Point & Figure Chart
Disclosure Note: Mr. Hirsch may buy or sell securities mentioned in this article at any time. At the time of this write Mr. Hirsch did not hold a position in BKW, but may buy or sell securities mentioned in this article at any time.
Jeffrey A. Hirsch is the Chief Market Strategist of MagnetAE Management LLC. Magnet® is a registered trademark of Jordan Kimmel. Jordan L. Kimmel is the Managing Member & Portfolio Manager of MagnetAE Management LLC.
By Jeffrey A Hirsch