Two quick things I remembered I wanted to post about:
1) I never linked to this great overview on CKE (the restaurant chain that owns Hardee’s and Carl Jr’s) by portfolio.com:
In an age when other chains have been forced to at least pretend that they care about the health of their customers and have started offering packets of apples and things sprinkled with walnuts and yogurt, Hardee’s and Carl’s Jr. are purposely running in the opposite direction, unapologetically creating an arsenal of higher-priced, high-fat, high-calorie monstrosities—pioneering avant-garde concepts such as “meat as a condiment” and “fast-food porn”—and putting the message out to increasingly receptive consumers with ads that are often as controversial as the burgers themselves…
Since 2000, CKE’s average sales per store have increased by 31 percent, a rate greater than any other burger chain’s, save for the nostalgia-mongering Sonic drive-ins, with which CKE is tied. And its stock soared, from about $2 in 2001 to more than $22 last June, before slipping back to around $15 at the end of the year…
Newton, Mississippi, is a place of churches, farmland, and small, low-slung, porch-heavy houses…This is prime Hardee’s country. According to CKE’s internal market numbers, two-thirds of Hardee’s locations are in small towns, mostly in the Southeast and Midwest. Blue-collar white males are well represented in Hardee’s customer base, and one-third of all its customers fall within the coveted 18- to 34-year-old demographic. More than 70 percent of Thickburgers are bought by men. Carl’s Jr.’s patrons also skew male, though they’re more moneyed; 29 percent make more than $75,000 a year.
How unapologetic are they? Portfolio also creates a comparison flash chart of their various burgers, including the baconator. It’s worth the click-through, and the main reason I’m posting this. Those stats are insane, even before you start looking at where all that meat comes from.
2) A quick technical note that ends on a disturbing factum. If you look at a stock’s info page, you may see the value of its beta. It’s a value that is used as a proxy for how risky a stock is. It is a number value that determines how sensitive a stock is to changes in the overall market. (Technically, it is formulated as the covariance of a stock with the market divided by the variance of the stock; alternately it is the coefficient of the stock returns regressed against market returns.)
A beta of 1 acts just like the market. A beta greater than one is very sensitive to the market. GM has a beta of 2.06 (very sensitive to market downturns). Below 1 is considered low-risk. GE has a beta of .63 (pretty steady investment in good times and bad). Here’s a gold stock with a beta of .41. That’s pretty low, and for a good reasons – people buy gold and other low beta stocks to hedge against market risk (which there is a lot of these days). A beta of 0 would be completely risk free (like a government bond).
Now want to see the lowest beta I’ve seen in a while? Corrections Corporation of America with a .13 beta. Here is their webpage (there’s even a nice youtube-ish video there for your viewing pleasure – I can’t embed it, but there are several across the pages which need to be seen).
You may shrug at this, and I understand. But I can’t really convey how crazy that number works out; giving your child stock in CCA is more secure and safe than giving your child stock in GE. It’s like taking out government bonds in its risk.