Alcoa Inc.
Thesis
Alcoa's core franchises are quality businesses generating returns in the low to mid teens, despite the overall company being misjudged due to the poor performance of its aluminum segment. The alumina business is particularly strong, benefiting from resilient pricing and demand from China, which is expected to grow at 5-7% annually. The valuation suggests significant upside potential, with a target price of $15.91 representing approximately 60% upside from the current price of $10.01.
Did it work?
The long thesis targeted $15.91 (~60% upside from $10.01) based on undervaluation of Alcoa's alumina and core franchises. The stock returned +402.7%, far exceeding the stated target price, decisively confirming the undervaluation thesis regardless of the elapsed time. The magnitude of the move indicates the thesis dynamics (resilient alumina pricing, China demand, misjudged core businesses) played out emphatically.