Wellcare Health Plans, Inc.
Thesis
Wellcare is a textbook example of a company that experienced a significant drop in stock price due to external events, specifically a federal investigation. Despite this, the fundamentals of the business remain strong, and the stock is undervalued, presenting a buying opportunity.
Did it work?
The pitch was a long thesis arguing that Wellcare's selloff on a federal investigation was an overreaction and that strong fundamentals made the stock undervalued. Instead, the stock collapsed by 96.3% since the pitch — a near-total loss of value that decisively invalidates the claim that fundamentals remained strong and the shares were undervalued. Regardless of the unknown time elapsed, a decline of this magnitude confirms the thesis was broken rather than merely early.