Aeropostale, Inc.
Thesis
Aeropostale is primarily a teen retailer facing difficulties in the current market. The turnaround they are attempting would be better accomplished in a private setting, either under a financial sponsor or as part of a larger company, where they can operate without the pressures of public scrutiny and quarterly evaluations.
Did it work?
The structural prediction — that Aeropostale's turnaround was better suited to private ownership under a financial sponsor — did eventually occur, as a Sycamore Partners-led consortium (with Simon Property Group and GGP) acquired the company out of Chapter 11 bankruptcy in 2016. However, the route to going private was bankruptcy, which wiped out equity holders rather than delivering the take-private premium a long position was predicated on. With no price data and unknown timing, confidence is low, but the known outcome is inconsistent with a successful long equity thesis.