Short Names on Our "Workbench": Scotts Miracle-Gro, Corsair Gaming, CF Indus, Gap Inc, Hub Group.

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

Scotts Miracle-Gro Co Cl A / Equity Bottom-Up

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<li>Scott’s core lawn care business is caught between rising fertilizer prices and declining demand after the Covid ‘fix-up-your-home’ wave began to dissipate.  </li>
<li>Fertilizer prices have spiked, hurting margins and “even if commodities start to ease, it will take a few years to claw back the margin we’ve lost”</li>
<li>At the same time, SMG’s cannabis growth strategy has fallen apart leading to a 65% decline in sales last quarter.  </li>
</ul>


Scott’s core lawn care business is caught between rising fertilizer prices and declining demand after the Covid ‘fix-up-your-home’ wave began to dissipate.  
Fertilizer prices have spiked, hurting margins and “even if commodities start to ease, it will take a few years to claw back the margin we’ve lost”
At the same time, SMG’s cannabis growth strategy has fallen apart leading to a 65% decline in sales last quarter.  


Scotts Miracle-Gro Company (SMG): Sell Short; Price: $84.57; August 17, 2022