market folly

We're posting up notes from the Ira Sohn Conference.  Hoplite Capital's John Lykouretzos gave a presentation on going long Starbucks (SBUX).  Note: This is his largest disclosed equity long per the most recent 13F filed with the SEC.  He just initiated the position in Q1.

Lykouretzos started at Tiger Management as an industrial analyst, PM. He then launched Hoplite in 2003.  He thinks about owning and shorting businesses, not stocks. No pair trades, no short ETFs.

Long Starbucks (SBUX):  $54 now. $90 price target in next 3 years. $42B market cap. Net cash $1.7B. Two main drivers:

1. Coffee market is large, growing rapidly, driven by "premiumization" $76B market, not cyclical. Single serve is gaining share, still only 10% of coffee market. US single serve is only 8% of market, but growing at 55% CAGR. K-cups are driving the market, from 5% to 18% share. Stores getting better, mobile payments, etc.

2. SBUX will capitalize; CPG, China growth. CPG growing, K-cup now 17% share from 8% a few months ago. China growth; brand like NKE or AAPL. In US, it's a morning coffee business, in China, it's an evening/afternoon with food, great margins, best in the company. Not undiscovered, but "winners keep on winning"


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.