FRESH PET IS A REAL DOG OF A STOCK

My good friend Tom Chanos said at last week’s conference:

SHORT FRESH PET STOCK

And the market finally started to figure it out.

FRPT dropped 10% yesterday on reports that Costco is developing its own fresh dog food under the Kirkland Signature brand to compete directly with Fresh Pet and Blue Buffalo.

This is a death blow for a company that was already in serious trouble.

For anyone who's been following the Fresh Pet short thesis that was presented at my Best Stock Ideas Summit last week, this is the nail in the coffin.

The case was already devastating BEFORE this news:

Fresh Pet's Q4 2025 revenue growth came in at 8.6%. Down from 43% in 2022. Down from 22% in 2024. That's an 80% collapse in the growth rate in 3 years.

They guided 2026 at 7% to 10%. The lowest in company history.

FOUR consecutive quarters of guidance cuts. One year ago they guided 21% to 24%. Now 7% to 10%.

Blue Buffalo, backed by General Mills and its $19 billion in revenue, had already launched its "Love Made Fresh" line into Walmart, Target, Kroger, and Costco. At Walmart and Target, Blue Buffalo undercuts Fresh Pet by 30% to 38% on price per pound.

That alone was a serious problem for a stock trading at 30 times earnings.

Now add Costco private label on top.

This would explain something that was flagged at my conference: on a recent Costco store check, the Fresh Pet refrigerator was MISSING. Replaced by a regular Costco refrigerator stocking both Fresh Pet and Blue Buffalo side by side.

If Costco launches Kirkland fresh dog food, it will be cheaper than both. That's what Kirkland does. That's the entire playbook.

Fresh Pet had the luxury of operating as a monopoly in refrigerated pet food for years. But then First Blue Buffalo entered. And now Costco private label.

The monopoly is being dismantled from multiple directions simultaneously.

And Fresh Pet's response to Blue Buffalo? They CUT their marketing budget by $13 million last quarter. Right as 2 massive competitors enter the market.

The earnings beat everyone celebrated came ENTIRELY from expense cuts, not business strength.

Meanwhile, input costs are surging:

Beef prices rose 15% in 2025. The USDA forecasts another 5.5% increase in 2026. Cattle inventories at a 75 year low. Fresh Pet can't raise prices because the competition is undercutting them.

Sequential revenue went negative for the first time in 17 quarters. Feeding your dog isn't cyclical. So if sequential revenue goes negative, they're LOSING existing customers - before Costco even enters the picture.

Over the last five years, Fresh Pet is down 60%.

And today's 10% drop isn't the end. It's the beginning.

Incredible call from Tom at the conference last week!