Watches of Switzerland Group PLC
Thesis
Watches of Switzerland is trading at a very low valuation despite its strong partnership with Rolex and a well-incentivized management team. The recent Swiss tariffs were incorporated into the valuation, and there are indications that these tariffs may be reduced, which could further enhance the company's prospects. The stock was purchased in August after a significant price drop, reflecting confidence in its medium-term distribution relationship with Rolex.
Did it work?
The pitch was a long undervaluation play expecting the shares to re-rate higher on the back of the Rolex relationship, management incentives, and potential tariff relief. After 36 months — a full medium-term horizon by the thesis's own framing — the stock returned -1.6%, essentially flat, meaning the anticipated valuation recovery never materialized. While the position avoided meaningful losses, a flat outcome over the stated horizon contradicts the core claim that the stock was significantly undervalued.