Prada: Turning the Corner After Challenging Five-Year Period

Andrew Macken of Montgomery Global Investment Management presented his in-depth investment thesis on Prada (Hong Kong: 1913) at Asian Investing Summit 2018. Andy explains why he turned from being short on Prada to going long the shares.

Thesis summary:

Prada is the pure Italian style, family-run luxury brand of more than one hundred years. Andrew believes the business is turning the corner after a challenging five-year period. During the last five years, the business underwent significant investment in its Asian distribution platform. At the same time, Prada – like all luxury goods businesses – faced an unprecedented headwind stemming from the Beijing corruption crackdown. In 2015, Andrew was short the stock. As of this writing, he was long the stock.

Prada is a high-quality brand, well-positioned in a structurally growing Asian luxury space, and can be acquired in the marketplace at a price that implies a set of expectations that are unreasonably conservative. Significant recent investments into the brand’s new digital strategy are starting to bear fruit. After years of negative same-store-sales growth, Prada has commenced 2018 with comparable sales growth of 7+%. This is the only instance of Andrew owning a stock he had previously been short.

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About the instructor:

Andrew Macken is the Co-Founder and CIO of Montaka Global Investments. Montaka Global Investments manages the Montaka global equity long/short strategies as well as the Montgomery Global long-only strategies, in partnership with Australian boutique fund manager, Montgomery Investment Management. After spending nearly four years as a senior member of Jim Chanos’ research team at Kynikos Associates, a global equity long/short fund based in New York, Andrew has developed particular expertise in short portfolio management. Kynikos is one of the largest short-focused hedge funds in the world and manages capital on behalf of high net worth families and institutional investors. Prior to this, Andrew worked as a management consultant at Port Jackson Partners (PJP), a leading advisor to corporates based in Australia and abroad. At PJP, Andrew focused on corporate strategy for major clients both in Australia and overseas. Andrew holds a Master of Business Administration (Dean’s List) from the Columbia Business School in New York. Previous to this, Andrew also graduated with High Distinction with a Master of Commerce, focusing on Finance; and First Class Honours with a Bachelor of Engineering under a Co-Op Scholarship from the University of New South Wales in Sydney.