We chose to remove Bloomin' Brands from our short term model portfolio this afternoon. There were several reasons for this. First, over the past 24 hours, we’ve had three different governors and three different mayors of some of the largest cities in America all discussing the likelihood of shutting down restaurants again into October, with closures occurring as soon as September. There is also escalating political warfare being waged into the elections and the restaurant sector could suffer. We have called every curve of the broad market virtually perfect since March 23. We have a short term top developing today or Monday and expect a pull back until Labor Day week. The last time we had a short term pullback marked was June 8, and we held the restaurant sector based on the discount to book value they were trading at - remember that downturn? We have highlighted those dates on the chart. Technically, we have triggered sell signals virtually identical to June 8. This business is about reducing risk. Given the increasing risks to restaurants, we have chosen to limit exposure by solely holding Denny's - it is imprudent to be doubled down right now. We will continue to hold Denny’s as it trades at a much deeper book-value discount than BLMN. If you are a long term or even a midterm investor, there’s no reason to sell Bloomin' today in our opinion. But you may have to wait until after the election to gain significant traction. We have several easy ETF trades coming up the next seven days that will not have exposure to individual company risk. They will be tremendous opportunities that we will not want to miss because of getting stuck in BLMN. Ultimately each investor has to make their own mind up. Again, over the medium to long term BLMN is a strong buy, but we are electing to take profits.
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