{ "docId": "019dd923-622b-71dc-a6db-c76db57564df", "docSlug": "4688728b59a1", "documentTitle": "Buffalo Wild Wings (BWLD)", "authorId": "07_Marcato", "authorName": "Mick McGuire", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2017-04-20 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 39, "pageCount": 50, "prevPage": 38, "nextPage": 40, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "Uses external analyst quotes to validate the activist's thesis regarding poor capital allocation.", "elementsJson": [ "headline_text", "paragraph", "callout_box" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6db-c76db57564df/39", "deckHref": "/decks/019dd923-622b-71dc-a6db-c76db57564df", "deckJsonHref": "/decks/019dd923-622b-71dc-a6db-c76db57564df.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6db-c76db57564df#slide-39", "components": [ { "bbox": null, "kind": "callout", "text": "Observers agree: the large franchisee acquisitions of 2015 destroyed value by diluting ROIC and eliminating a highly valuable, high-margin royalty stream", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0391-77f4-a9ef-1c32b884f021", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.12 }, "kind": "paragraph", "text": "Observers agree: the large franchisee acquisitions of 2015 destroyed value by diluting ROIC and eliminating a highly valuable, high-margin royalty stream", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "eb4fa346-5f80-4eee-9217-7036a219572d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.47, "x": 0.02, "y": 0.23 }, "kind": "quote", "text": "\"[T]he last minute exercise of the first right of refusal to buy a big block of franchise stores in 2015 ...is a perfect example of how misguided your incentive compensation structure is and how poor strategic planning can lead to poor capital allocation decisions\" -Howard Penney, Hedgeye, 10/17/16", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "930e1883-9793-44b1-8a2c-62c48d329913", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.47, "x": 0.02, "y": 0.59 }, "kind": "quote", "text": "\"[R]eturn metrics suffered from the company's FY15 decision to acquire a large number of franchisees...[which] resulted in lower operating margins and financial returns as incremental capital was deployed to eliminate a high margin royalty revenue stream\" -John Zolidis, Buckingham, 7/26/16", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bff45066-70c6-4bac-871b-9c8b23c66756", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.47, "x": 0.51, "y": 0.23 }, "kind": "quote", "text": "\"[T]he most recent acquisition (38 units in the 3Q15) has weighed on earnings and came with a rich multiple, adjusting for the foregone royalties\" -John Glass, Morgan Stanley, 7/25/16", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c5357f14-d6bf-4595-8b5b-5cc0c6691790", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.47, "x": 0.51, "y": 0.59 }, "kind": "quote", "text": "\"Acquiring franchise stores increases business risk...Why in a slowing sales[,] lower return environment would the parent company want even greater exposure to the volatility in the business?\" -Howard Penney, Hedgeye, 6/13/16", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e0326ac3-5050-4171-b3ce-85dba644b8f2", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"[T]he last minute exercise of the first right of refusal to buy a big block of franchise stores in 2015 ...is a perfect example of how misguided your incentive compensation structure is and how poor strategic planning can lead to poor capital allocation decisions\" — Howard Penney, Hedgeye, 10/17/16; \"[T]he most recent acquisition (38 units in the 3Q15) has weighed on earnings and came with a rich multiple, adjusting for the foregone royalties\" — John Glass, Morgan Stanley, 7/25/16; \"[R]eturn metrics suffered from the company's FY15 decision to acquire a large number of franchisees...[which] resulted in lower operating margins and financial returns as incremental capital was deployed to eliminate a high margin royalty revenue stream\" — John Zolidis, Buckingham, 7/26/16; \"Acquiring franchise stores increases business risk...Why in a slowing sales[,] lower return environment would the parent company want even greater exposure to the volatility in the business?\" — Howard Penney, Hedgeye, 6/13/16", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0391-77f4-a9ef-23e66151157b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.6, "x": 0.22, "y": 0.95 }, "kind": "source-note", "text": "Source: Wall Street research. Indicates a quote taken from a report published before Marcato publicly disclosed its suggestions to management, indicating an \"unaided\" observation.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "07c201e5-d478-4301-866c-ad7c71409cf9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.05, "y": 0.05 }, "kind": "title", "text": "THE STREET ALSO RECOGNIZES THIS WAS A POOR USE OF CAPITAL", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "35e1d6a1-0fa7-476f-9fc1-0361834b7a19", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "authority-citation", "slug": null, "matchId": "b623b466-8c41-4aa8-99be-3a4517d5063f", "evidence": "Uses quotes from Morgan Stanley, Hedgeye, and Buckingham to validate the thesis.", "confidence": 0.9 } ], "arcBeats": [ { "to": 49, "from": 7, "beatId": "577f34c3-585b-4a10-ab75-d4a71d62e71e", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Solution", "beatSlug": "problem-agitate-solution-solution-provide-relief", "evidence": "The document provides a solution: REITERATING MARCATO'S MULTI-LEVEL PLAN TO CREATE VALUE FOR BWLD SHAREHOLDERS", "position": 2, "confidence": 0.8, "parentBeatName": "Resolution", "parentBeatSlug": "resolution" } ], "loops": [ { "to": 50, "from": 6, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "bee45f76-1c20-4bd4-ab97-dc946ed607cf", "evidence": "The document implies that inaction will result in continued underperformance", "position": 0, "objective": "What is the cost of inaction?", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.7, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }