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Nearly one year ago, we published “Boring Business Stock Market (and Sentiment Results),” laying out our thesis on VF Corp. (VFC) at what seemed like its lowest point. Now, just as we made bold predictions last year, we’re doing the same again, says Tom Hayes, editor of HedgeFundTips.

Back then, VF Corp. had just reported a brutal Q4. Vans revenues were down 27%, North Face down 5%, Timberland down 14%, and Dickies down 15%. The stock had collapsed below $12, falling below its GFC lows.

While investors wrote the stock off as dead, we saw the dislocation as an opportunity. Despite the overwhelming negativity, we laid out a turnaround playbook and a series of events that many thought were inconceivable, earning more than a few double takes. I didn’t earn the “Turnaround Tom” nickname by chance. But as the saying goes, it’s always darkest before dawn.

VF Corp. (VFC) Chart

At that point, Bracken Darrell had been at VF Corp. for less than a year, but we were pounding the table on his turnaround expertise. His track record speaks for itself. He led Old Spice’s turnaround, tripling its market share and turning it into the category leader it is today.

Then, he took over Logitech in 2013 when the stock had fallen more than 80%. Within seven and a half years, it became a 27-bagger, turning a $1 million investment into $27 million.

We said the first major catalyst for VF Corp. would be an asset sale, either the Packs Business or Supreme, and that one morning, we’d wake up to the “surprising” news of a multi-billion-dollar deal that would push the stock higher. Less than two months later, VF Corp. reached an agreement to sell Supreme to EssilorLuxottica for $1.5 billion, sending the stock up nearly 15%.

This past quarter, VF Corp. grew total revenues by 2%, marking its fourth consecutive quarter of sequential improvements. North Face grew 5%, Timberland grew 12%, Vans was down 8% (but continues to improve sequentially, getting closer to an inflection point), and Dickies improved sequentially, though still down 10%.

We believe that over time, VF Corp. will actually climb back to all-time highs. The business will be humming again at a solid, mid-single-digit clip and acquiring new brands, just as it has for the past 100+ years. Same playbook, different century.

My recommended action would be to consider buying shares of VF Corp.

About the Author

Thomas J. Hayes is the founder, chairman, and managing member of Great Hill Capital, LLC (a long/short equity manager based in New York City). Before starting his own firm, Mr. Hayes worked with Cornwall Capital, LP (one of the firms featured in The Big Short book and movie).

On a weekly basis, he publishes his timely stock market commentary, Hedge Fund Tips with Tom Hayes videocast and podcast. He has a wide following in the investment management, hedge fund, and media community.

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