The Best One Yet - “Viagra for Women” gets FDA approval, McDonald’s fresh beef investment pays off, and Caesers gets acquired to create the biggest US casino operator

Episode Date: June 25, 2019

McDonald’s Quarter Pounder was launched with fresh beef a year ago — and that just propelled McD’s to its first gain in burger market share in 5 years. Caesars merged with Eldorado to create the biggest casino in the US, but activist investor Carl Icahn is the real story. And what’s being called the “Viagra for women” just snagged FDA approval, so we look into why the pharmaceutical company’s stock fell.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick, this is Jack. This is snacks. Daily is Tuesday, June 25th. Markets Dip, this is the best one yet. We have three great stories. We like this one a lot. The first story, big news for the quarter pounder. McDonald's just gained burger market share for the first time in five years.

All about fresh beef on this one, we're jumping to Dow. Second story, Casino Giant Caesars just got acquired by El Dorado. Very nice. But we're more interested in the puppet master behind this deal. It's a man named Carl Icon and a concept called activist investing. Third historian, a drug called Vialisi. It just got approved by the FDA, and everyone's calling it the Viagra for women. We'll talk about if that's actually true.

Wall Street definitely didn't think so. Before we jump into that, we got to talk about some data we were able to get for you guys from our buddies over at Venmo. Venmo just came out with its first ever, hopefully first annual set of etiquette tips for how to send payments on Venmo. We're talking recommendations on proper payment protocol when you're splitting your brunch or your rent or anything. This is a survey that Venmo did with a bunch of Venmo. users, and 76% of them would prefer to send a Venmo payment than to get a Venmo request. You know what we're talking about. That one that poop pops up on your screen and you want to send eggs to Timmy. It's literally a bill that you get texted. It's a guilt situation

and no one likes that. So go ahead and pay people back first. The other key was that there is a statute of limitations here. People expect to be played within 24 hours. And if you don't get paid back in 24 hours, you might get the dreaded Venmo bill. Now, just because we want to make sure everyone is prepared for life events here, we got some interesting data on Bachelor and Bachelorette party. This one's big. Eighty-eight percent wish that you would discuss kind of like payback the situation before the bachelor or bachelor party. You got it. I mean, no one knows if the snacks are going on like Julie's tab or if Julie's that kind of person who's going to send out the Venmo request. I can tell you from personal experience that there's going to be a catfish buffet

at your Key West bachelor party or bachelorette. And figuring out how to pay that back in advance is beneficial for all. It is critical. You got to follow the etiquette rules. Appreciate Venmo sharing with us. The more you know. Now listen to these keywords before we hit our stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about the hair ain't food. It's air candy. They don't reflect the views of the Robberhood family.

It's all informational just so. You know, we're not recommending any securities. It's not a research report or investment advice. Not an offer or sale of a security. Right. Snacks is digestible. Business news for you. Robahood Financial, LLC, member FINRA slash SIPC.

For our first story, Jack, medium or well done? Medium or a trick? Yes, I was going to say. For our first story, we're talking about McDonald's, whose burgers are gaining market share for, like, the first time in five years. The key question is, cut in half or don't cut it? The burger? I always cut in half.

You always cut it in half. Some of my buddies accuse me of, like, not being manly. No, my dad told me to do that. But you get more surface area. I think it increases this. I also dip the half burger into the ketchup. I don't spread it before. Could be totally wrong in the service anything.

Are we twins? Someone should let us know about what's going on with it. So McDonald said that it sold. over 40 million more quarter-pounders last quarter than the year before. Let that number sink in. Because of the fresh beef. Now, we're doing a little back-in-the-envalow math here. Apparently, from our research, there are 4,500 burger patties in a cow.

That means 10,000 cows were devoured last quarter on just these new quarter-pounders. Well, thanks for making me guilty. I know. That feels a little disturbing. So McDonald's has been food-shamed recently. Wendy's has this whole campaign. They say they never freeze their burgers. You got Burger King coming out with the impossible burger, which is vegan, so you don't have to deal with that whole cow thing.

So finally, McDonald's responded. It has fresh beef quarter-pounders, and it's resulted in a market share gain for the first time in five years. That means it's getting a bigger fraction of, like, all the sales in this area. In this area, you mean the informal burger category. That sounds highly technical. That's quote-unquote. Maybe it had 30% of the informal burger category before, and now, like, a little more than 30%. My favorite part of this all announcement was when one of the McDonald's spokespeople said, our numbers speak for themselves. Yeah, hilarious because they did not tell us the gain. in market share. So we assume it was like a tiny fraction of 1%. Basically, they'd have said they've gained market share.

Now, this little change, fresh burgers, it actually caused a huge complexity in the supply chain. You may just show up at your McDonald's and say, hey, they have fresh burgers, that's nice. This is something that was four years in the making. This is like a whole game of Thrones. That's longer than a wedding plan. It's ridiculous. So first, they had to design new refrigerators that could keep burger meat cool at the right temperature. Then they had to get those new refrigerators to all the locations serving the new fresh beef.

And then they had to serve each restaurant new kitchen utensils because you know those room temperature burger patties. They fall apart. You know those patties. And frozen patties you can toss around like a frisbee. This things are weapons at a certain point. And then they trained 3,000 independent contractors to prepare the product, quote unquote, to actually make this ultimately become a burger in your mouth. I think that actually just means form the burgers into pads. Yeah, I like that they said training on this because it does sound kind of highly technical.

So it launched one year ago and they finally have like year over year results. By the way, apologies to our buddies over in Hawaii and Alaska. Yeah, it was only in the 48 contiguous. Also, apologies to the other U.S. territories. Puerto Rico, American Samoa. So quarter pounder sales jumped 50% in the first month. First month that this came out. Are they going to expand to Big Mac?

Right. Are they going to bring this thing abroad? So far, it's just quarter pounders in the 48 contiguous. Many questions. So Jack, what's the takeaway for our buddies in Big Macs over at McDonald's? This is why you invest in your growth. McDonald's is spending $6 billion by 2020 to renovate stores with like kiosks and modernizements, they don't look, you know, like dens. And to give it fresh ground beef

for the burgers. And quarter pounders are a great example that these kinds of investments can pay off. We're talking big investments that affect the entire supply chain and take, you know, half a decade. Gaining market share, it's the holy grail. For our second story, resort casino legend El Dorado, just bought resort casino legend Cesar's. And they're going to be the biggest casino company in the country. Yeah, you actually said one bought the other. It's actually going to be a 51% 49% merger? It adds up to 100%. But the result is 60 casinos in this new company across 16 states. Now, if you're El Dorado, you're the casino chain here, you're paying $8.5 billion to make this thing happen. But wait, there's more. Talk to me. Cesar also comes with $8.8 billion in debt.

Sounds wonderful. So if they paid $8.5, but they're taking on $8.8 in debt, really, they're paying $17 billion. Now, you were talking about a couple casinos here, but the real winner is the guy at the $15 minimum blackjack. table by the name of Carl Icon. He's been sitting at that blackjack table for like 80 years. The guy's 83 years old. He is the founder of the hedge fund Icon Enterprise. Now, if you haven't met Carl, we'll give you a little background on Carl. He is famous for secretly taking control of TWA Airlines back in 1985. In 1985, and he ruthlessly sold away like its best assets and made a bunch of money. If that sounds familiar to you, it's because it's also kind of the plot of the movie Wall Street. Yeah, that's our take. You know the Michael

Douglas Charleachian? Yeah, the father's son duo. That's like the plot of Wall Street. It's basically the same thing with Carl. So in February, he announced he had acquired 9.8% of all the shares of Cesar's Entertainment. Which is like that ridiculous chain of casinos where they got that one in Vegas that's supposed to kind of look like ancient Rome. No, there's Caesar's Palace and then apparently a bunch of other ones. Yeah, but how did they replicate that whole like Venice situation? Artificial. Yeah, it's not real.

It's not the right thing. So his first move was to publicly state that Cesar's should sell itself. Now, Cesar's over there was a little bit intimidated. Oh, my God. It's Carl Icon. Carl Icon's here. He's targeting my company. And he just invested and now it's like 10% of the company.

Let's give him whatever he wants. So Cesar's came up as if he was like the big spending whale over at the blackjack table now and just gave him unlimited drinks. They gave him three seats on the board and they let him help decide who's going to be the next seat. Honestly, this is like if someone came up to you and the first reaction you had was, okay, here's my lunch money, take my lunch money. They're like, I just need directions. Yeah, they were really intimidated and just bent to his will.

Now, by March, Carl E. Cohn owned 16% of Cesar's because he started. started accumulating more and more ownership in the company. So now he's got a lot of skin in the game. He really wants Caesars to get sold. So he starts jetting around the country. Private. Talking to, like, casino owners and saying, how great would it be if someone bought Caesar's?

How are you doing it? You know, it's really about me. No one's bought Caesars yet. Caesars reportedly got an offer for $11 a share to get acquired by Eldorada. Carl Econn wasn't satisfied, though. Yeah, he thinks they could have sold for more. So he basically rallied everyone to reject the deal. and now the deal announced yesterday was for $12.75 per share. Okay, so this means that

Caesar's entertainment's being acquired by El Dorado for $12.75 a share, and for Carl Icon, that means his investment paid off. Yeah, that little boost from 11 to 1275, that alone was worth $175 million more dollars in return. So, Jack, what's the takeaway for our buddies over at Caesar's aunt Carl? This is American-style investor activism. Basically, American-style investor activist is when you take a stake in a company. You acquire that stake. And then you publicly insult the management of that company. And then you publicly push for change because guess what? I'm a shareholder. I own a bunch of shares. I can say what I want. Carl Icon, the original American style activist investor got a 51% return on his investment in just four months using this method.

And afterwards, he issued a statement on Carl icon.com. He praised Caesar's board for basically bending to his well. And then he said this merger is a classic one plus one equals five. Bring two companies together. You get five times the craziness. For our third and final story, the FDA just approved the Viagra for women, Valisi, except the drug manufacturer stock fell. Yeah. So, fine print here. Vileisi will be available in September. There's no pricing yet, and it's not clear if it turns. I wish you'd done that at one of those, like, creepy, no, no, no, no, do not use when you're using alcohol. Production company, can you please three times fast my voice there?

Do you not use Vleisi when you're doing blah, blah, blah, blah. So the company behind Vibeiro, Vialisi did two double-blind studies, including 1,200 world. Classic. Every drug company does a double-blind study. Double-blind study means they're like, hey, we want to test out these new drugs. But we're not going to tell you what we're testing. But we're not going to tell you what the drug is. But you are going to get paid for testing. Now, the drug is actually the chemical drug is called Bremal.

It's unproncible. It doesn't even matter. Thank you for being now. The brand name of the drug is Vialisi. Which is Mother of Dragon. As you may know. Now, the branding, like the actual packaging, it's millennial pink. It's two-toned.

Classic. We couldn't help but notice. it's got the same font as hymns. Very noticeable. Which is the new Viagra for erectile. It's kind of got like a direct-to-consumer vibe going on there. And the company behind it is the pharmaceutical company, Amag, based just outside of Boston. Like all of your college budget.

No one's actually from Boston. So this comes down to market-sizing the opportunity. Exactly. The focus, the target for this drug is pre-menopausible women who have a hypoactive sexual desire disorder. Hypo, not hype-earned. Exactly. This affects up to 10% of the American women population. So they're expecting like 5.8 million American women are suffering from this.

Right. So clearly this is a serious problem, but there's only been one drug developed so far that attempts to treat it. It was unsuccessful. Meanwhile, there's 20 Viagra-like drugs for erectile dysfunction. So how do you use this thing? It's kind of wild, actually. It's actually injection.

Exactly. 45 minutes before a woman's going to have sex, she will take out this needle and will inject herself in either the thigh or the abdomen. Yeah. So clearly these drug developers have a long ways to go. I wouldn't mind if this thing was in a pill farm. Exactly. It'd be a lot easier.

Now, another key here is that it affects your brain receptors when you're using Vylisi. And Viagra just affects the blood system. So this is a key distinction. Desire is different than arousal. Okay. Vylici treats desire. Viagra just treats arousalry. Viagra treats when you want to have sex. Violioliolioli treats when you want to want to have sex.

Key distinction. Exactly. So, Jack, what's the takeaway for our buddies over at Vialisi and the company that owns it, ANag? Bad news spin can kill this good news that the company thought it had. This is actually a two-stock story because you've got Palatin technologies who actually developed the drug and they're just licensing it to Amag outside of Boston. And then you got, so Palatin actually gets a $60 million bonus plus royalties because of this FDA approval.

Meanwhile, Amag gets to continue selling the drug and they'll get all the future sales. So everything looked great for these two companies. Wonderful Monday, great way to start the week. The FDA just approved your Viagra for women. Right. That's like a huge deal. And then suddenly an article came out in stat, which is a leading health science website that was completely panning this new drug. Basically, it said injecting is wildly unhelpful 45 minutes before sex.

And they pointed out to some side effects, including nausea and vomiting. And they said, like, this is just not going to work. So when we checked out the stocks of Palatin and Amag yesterday, we noticed they jumped 39% and 12% on the news. And then after this article came out, they ended up down yesterday, over 5% each. So both companies are now going to focus on trying to reverse all that PR and prove that, in fact, they may actually have the Viagra for women. Jack, can you whip up the takeaways for us over there? McDonald's owns more of the burger market, thanks to its investment in fresh beef. We would love to see the blueprint prance for this, like, new fridge they whipped up to it.

I would. Second, El Dorado did exactly what Carl Aiken wanted. It paid big money to acquire Caesar's entertainment. And we just can't get this image of Carl Acon out of our minds going around on his plane pitching this deal. And finally, Vialisi. Clearly, Viagra for Women is the wrong way to describe this drug. Now, it's time for a snack fact of the day. This one's sent in by a Molly D. M.

Molly D. Martel. She's technically my wife. I got to say, great girl. We love this one. Great girl. So according to a study, technically from outside of Boston. Yes. Very true.

She wants me to say New York. She's really from New York. From right outside of Boston. So according to a study, if we spend less time working, we will have a smaller carbon footprint. Specifically, if we spend 25% less time working, that'll cut down our carbon footprint by a hefty 6.6%. And that's because working, you know, you've got to get to work so you're commuting. You're making things that require energy. I think we've done like six facts in a row that are basically around working less and having a four-day work week.

Exactly. Four-day work week and key takeaway? That's got to help with the carbon footprint. Do less. Now, a couple other great stories we're covering in our snacks daily newslet. Well, Amazon just unveiled a professional beauty store, which was bad news for Alta Beauty and Sally Beauty. And then Del Frisco's, the steak chain that, like, people just expend stuff at just got acquired for $650 million. Snackers. That was a T-Ball. I don't care what anyone says.

Well, no one can talk to us right now. We'll be back with you tomorrow morning as I'll explain. Can't wait. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc. or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a, a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision.

Robin Hood Financial LLC, member FINRA, SIPC.