Constellation Brands, Inc.
Thesis
Constellation Brands has a strong position in the wine market and is benefiting from a trade-down effect where consumers are opting for less expensive wine brands. Despite some gross margin pressure, the company is undergoing a cost-reduction program and has a solid EBITDA margin. The current market valuation implies that the beer business is essentially free, and there is significant upside potential as the stock is undervalued compared to its intrinsic worth.
Did it work?
The long thesis argued Constellation Brands was deeply undervalued, with the beer business 'essentially free' at the prevailing valuation and significant upside to intrinsic worth. The stock returned +1088.1% since the pitch — more than a 10x gain — decisively confirming the undervaluation claim regardless of the exact time elapsed. A return of this magnitude far exceeds any reasonable interpretation of the thesis's upside potential, so the thesis clearly played out.