There seem to be a Starbucks on every corner in the nation. And if these were not enough, you can Dunkin donuts. So what is a trader to do.
I have been looking at shorting Starbucks and Dunkin. And as part of my research I came up with couple of things. Jim Chanos, a famous shorter, has had a short on Dunkin for a very long time, based on financials. I am not really sure what he is looking at.
The other thing is that Starbucks have a plan to return 25 billion to the share holders, in dividend and buy backs. Mostly the latter. They have executed 9 billion in buy backs and plan in another 5 that has been approved. But when that runs out they are going to find themselves, I think, fighting over extension and extensive selling. Buy backs are made for the officers not the shareholders. Because, the only way to cultivate a buy back reward as a share holder it to sell and what a way reward him or her.
I initiated a short on DNKN on the 13th of December @71. Will see how far it goes.