Avon Products, Inc.
Thesis
At $20 per share, Avon common stock represents an opportunity to buy an $11 billion dollar iconic global beauty products company near its historical trough value. The company has strong market shares in emerging markets and a new management team that can improve operations and margins, potentially leading to significant equity value creation in the next 2.5 years.
Did it work?
The long thesis called for significant equity value creation within 2.5 years, but the stock instead declined 78% over the 14+ years since the pitch, moving decisively against the long position. Far from improving margins and operations, Avon's business deteriorated severely, with the shares collapsing well below the claimed trough valuation of $20. The thesis was decisively invalidated regardless of the elapsed time, given the magnitude and direction of the loss.