Einstein Noah Restaurant Group, Inc. (BAGL)

Consumer goods and spending will be down in the coming months. In general this stock seems to follow the market, and consistently remain below the S&P 500. At best this stock will only come close to to matching the S&P in the coming months.

BAGL represents A classic early Buffet partnership "control" situation, except it is David Einhorn at the helm instead of Mr. Buffet. Like Buffet, I believe Einhorn didn't get active here for the sake of being active. After all, both have said many times that everything else being equal, they would rather let other's do the work. However, in particular situations (if the opportunity for profit is large enough, and the risk of permanent capital loss is small enough), both men believe that an active role is necessary to optimize the employment of capital, as is the case here.

It is worth noting that investment results within a "control" situation like BAGL must be measured on the basis of at least several years. For those looking for meaningful results within a relatively quick time period, I would advise you to venture elsewhere, event driven investing this is not.

Anyhow, similar to SHLD (Lampert) or SNS (BIglari), I think there is real opportunity here for Einhorn (and management) to re-engineer the portfolio -- close businesses that are a drag, maybe reallocate capital among businesses, etc. Given time I think Einhorn will get it right, although it won't happen overnight.

Within the next 2-3 years I expect BAGL to produce considerably higher profits than its current price implies. Assuming the favorable outcome I expect comes to fruition, I believe the market is likely to assign a valuation more in line with the underlying earnings power of this high quality franchise, producing outstanding risk-adjusted returns over the next 3-5 years for patient long term investors.

.