Homex
Thesis
BUY Homex 9.75% Senior 2020 Notes. Even under aggressive downside scenarios, making money requires only a 5% probability that the notes remain performing. I estimate this probability as at least 30% due to HMX’s market leadership, strong relationships with banks, and the favorable macroeconomic outlook in Mexico.
Did it work?
The Homex 9.75% Senior 2020 Notes returned -100%, meaning the bonds were wiped out entirely — the opposite of the thesis that the notes would remain performing with at least 30% probability. The notes' 2020 maturity has long since passed (159 months elapsed), so the full thesis horizon played out and the default outcome is decisive. Homex's financial distress overwhelmed the cited market leadership and bank relationships, validating the downside scenario rather than the bull case.