I discussed our investment in Coty in my prior letter. As anticipated, the path has been bumpy. Coty reported unremarkable results for the last three months of 2016. The Proctor & Gamble beauty brands acquisition closed on October 3, 2016, so this was the first quarterly report that included the results of the combined business.

My expectation was that this quarter would be far more noise than signal and the results confirmed that. The P&G brands were orphaned businesses for years and the deal took fifteen months to close. It was not surprising that results were tepid during the first three months following the change of control.

The stock had performed well going into the report and subsequently relinquished those gains. Investors with a three-month time horizon were signaled that they could redeploy their capital elsewhere and return before the next quarterly results are announced in May. One of my competitive advantages is being able to invest with a two to three-year time horizon and I added to our position on the share price weakness that followed the quarterly report.

This post has been excerpted from a letter of Aquitania Capital Management.