Here are Doug Kass' top thoughts on some of the biggest stories of the week.


Adding 3 Consumer Staple Names as 'Best Ideas' Shorts

As I wrote in my opening missive below, consumer packaged goods stocks are likely overpriced.

Stated simply, brand loyalty is for oldsters.

As an example, consumers are buying Amazon (AMZN) basics and other private-label batteries rather than the Coppertop or Bunny brands. The same applies to packaged food products.

As a result, prices, margins, cash flows and profits are dropping for many consumer packaged goods companies that previously were seen as possessing deep, broad and impenetrable competitive moats.

Meanwhile, valuations for consumer staples at over 20 times trailing earnings seem unsustainable and could fall over the next 12 months.

I am placing Unilever (UN) ($59.76), Procter & Gamble (PG) ($92.56) and Mondelez  (MDLZ) ($40.88) on my Best Ideas List as shorts.

Position: Short UN, PG, MDLZ .


Trades of the Day

Since I was out for several hours Tuesday afternoon I wanted to summarize the day's trades that were executed (and some that weren't):

* I added to my large Well Fargo (WFC) investment at $51.34. I plan to buy more in the days ahead.

* I re-established a ProShares UltraPro Short QQQ (SQQQ) long at $28.49. I am large sized and will continue to add on weakness if the overall market firms.

Position: Long WFC (large), SQQQ (large), AGN, JWN (large), DDS (large), RDN (large), Short AMZN (small).
 
Originally published Aug. 30 at 7:09 a.m. EST
 
Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings. This week he blogged on:
  • How doubt is OK
  • How to tell the lay of the land

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Action Alerts PLUS, which Cramer manages as a charitable trust, has no positions in the stocks mentioned.

 

 

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