Halftime Report

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Halftime Report

Media, Fast Food and Retail in the Blitz

Key Points
  • The "Halftime Report" traders and CNBC contributor Michael Farr give their trades on the day's biggest movers.
  • HPM Partners' Jim Lebenthal sold Madison Square Garden Company.
  • Traders Steve Weiss and Pete Najarian believe Chipotle is overvalued.

The “Halftime Report” traders and CNBC contributor Michael Farr gave their takes on media, fast food and the retail sector during Thursday’s "trader blitz."

The Madison Square Garden Company surged on Thursday after the board announced it would explore a possible separation of its sports teams from live entertainment. This potential spinoff would create a new, separate public company for the New York Rangers and New York Knicks franchises, among others.

HPM Partners’ Jim Lebenthal, who bought MSG in February of 2017, sold his position following the announcement.

“Now, what I’ve got is fair value for the Knicks and Rangers in Madison Square Garden, all of which are pretty high value,” he said. “Does somebody pay more than the 3.6 billion that "Forbes" values the Knicks for? I don’t know but I’m not going to play around for that. It’s been a great stock.”

Rangers, Knicks and the big winner Jim Lebenthal

Following a strong quarterly earnings report, McCormick shares hit their highest level in nearly 20 years but Farr, Miller and Washington President Michael Farr believes the stock can continue to work.

“I think the company is well-positioned, they really had to turn things around.... at 9-times, 10-times earnings, I think it makes sense,” Farr said.

Bed Bath & Beyond stock fell on Thursday after reporting a decline in same-store sales, despite beating on earnings and overall revenue estimates. Investitute’s Pete Najarian thinks that the retailer is losing some market share to the “Targets and TJX’s of the world.”

Chipotle was also under pressure, after it announced plans to close more than 50 underperforming restaurants in the near future. Steve Weiss of Short Hills Capital Partners believes Chipotle shares are “hitting reality” after the recent run-up following the hiring of CEO Brian Niccol.

“It’s so overvalued. It was even overvalued at the bottom relative to restaurants.” Weiss said. “It was trading like a high-tech company and it’s not.” Chipotle currently trades at 42 times next-twelve months’ earnings, compared to roughly 17 times for the .

Najarian views CEO Brian Niccol as a positive for the company going forward but, like Weiss, has a hard time justifying the stock’s valuation.

“I do think it was a great hire. They’re going to work on the technology side of things. All of that is a positive and that’s why the stock had the run,” he argued. “I think you’re seeing days like today where you’re down 8% and people are focusing on ‘hey look where is this thing’s valuation?’ It’s too high.”

Chipotle shares lagged behind industry competitors like Starbucks and McDonald’s during Thursday’s trading session, while the broader discretionary sector finished the day in positive territory.