Trex Company, Inc.
Thesis
The inventory channel refill dynamics created a tough comparison for Trex, leading to a projected revenue drop of 30-40% by mid-2022. With rising interest rates impacting consumer financing for large investments like decking, the stock was seen as a short opportunity.
Did it work?
This was a short thesis predicated on a 30-40% revenue decline by mid-2022 and rate-driven pressure on decking demand, but the stock is up 54.7% over the 55 months since the pitch — the opposite of what a short position needs. The thesis's own catalyst window (mid-2022) has long since passed, and while Trex did experience a demand downturn and interim volatility, the projected revenue collapse did not prevent substantial net share price appreciation. With the full horizon elapsed and the price moving decisively against the short direction, the thesis clearly failed.