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Domino's Pizza Is Lemelson Capital's Biggest Short, Debt Structure 'Resembles A Pyramid In Shape'

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Domino's Pizza Is Lemelson Capital's Biggest Short, Debt Structure 'Resembles A Pyramid In Shape'
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After supporting Amvona Fund Management's short position on Domino's Pizza, Inc. (NYSE: DPZ), the Rev. Emmanuel Lemelson told Benzinga that “investors would be better off buying tulip bulbs in March 1637."

Lemelson said Domino's “egregious” debt structure “resembles a pyramid in shape.” He reported that the company relies on franchises to raise debt to feed payments upstream to corporate, and, with alleged reliance on this structure and on low costs for energy, labor, loans and cheddar, small changes in these factors will have material impact on earnings and growth.

Lemelson accused management of failing to warn investors about the risks of buying shares at current values.

“Domino’s is priced like a Silicon Valley tech darling,” he said in reference to the company’s reputation for innovation.

After positive performance in recent years, Domino’s has been held as a paragon of the food industry. Corporate success has been attributed to innovative use of technology in business — from the early online ordering system to a 3D Pizza Builder iPad App.

Some analysts maintain confidence in the company’s capacity for growth in 2016.

Domino's could not be immediately reached for comment.

The stock is up more than 58 percent over the past 52 weeks.

Domino’s shares fell about $4 over the last few trading days and traded recently at $164.99.

Image: Gabriela Pinto, Flickr

Posted-In: Rev. Emmanuel LemelsonShort Sellers Short Ideas Top Stories Exclusives Movers Trading Ideas Best of Benzinga

 

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