Consumer Staples
Vision’s bear thesis focused on growing competition in protein powder, potential lack of pricing power in the face of elevated input costs; weak positioning in diet and RTD category; weak margins, ROIC and FCF; and inventory growth. The share price declined 23% on Feb 26th the day of earnings and the short generated alpha of ~45% vs. Stoxx600. Vision initiated 8 new shorts in 3Q24, 10 in 4Q24 and 4 so far in 1Q25 of which 10 were US, 8 European and 4 Asian. Consistent with their goal of finding liquid, non-consensus shorts, these 22 ideas had avg. m/cap >$15bn, avg. AD$V >$65/day and avg. SI% of free float of <4%.
Midcap Medtech & Staples have performed well but both look challenging
The share price performance for Willis Welby’s Medtech group has been startling YTD (+23.8%), but revisions are not impressive (the median move in consensus Y2 EBIT over the last 3 months is now a CUT of 1.8%), they have problems with financial productivity and levels of implied to Y3 EBITM ratios are very demanding. Willis Welby highlights Elekta and COMET but cannot make their maths work elsewhere. Financial productivity is also an issue in their Staples coverage and the median consensus Y3 revenue growth number is just 2.8%. Expectations ratios are not as extreme as Medtech's but are still demanding. Glanbia still makes sense, but they struggle elsewhere.
