This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why we dumped our position in Avon

Stocks in this article: AVP JNS LM NYT

By Ironwood Investment Management

The Covestor Ironwood SMID Cap Value portfolio had a good December, rising about 2%. In December, the strategy had strong gains in our financial and healthcare stocks, somewhat offset by our technology stocks.

In particular, Legg Mason (LM) and Janus (JNS) did well. Legg Mason's new CEO Joe Sullivan is implementing a plan to expand the firm's product base and improve its asset gathering capabilities, with the goal of restoring the firm to its previous status as a quality growth company.

Janus' new CEO is focusing on turning around their investment product performance and stabilizing their asset base, while continuing to build their cash balances.

The New York Times (NYT) also rose strongly in the month. The turnaround, led by new CEO Mark Thompson, is showing impressive traction, not only from the completion of their divestiture program but also their increasingly successful digital subscription business and budding reputation as an innovative content provider. We did not initiate any new positions in December,and here are some stocks we sold.

We had owned Avon Products (AVP) since our portfolio's inception. Avon had many of the traits of a promising investment: a new outside leadership team led by new CEO Sheri McCoy, plenty of opportunities to restructure and streamline operations, steady and ample cash flow, a balance sheet that could readily be improved, a regulatory overhang ready to be resolved, and a deeply-discounted share price.

Early in our holding period, the company showed impressive progress and promise in all of these areas, and the stock responded with strong gains. However, when Avon reported weak third quarter results, it became apparent that the fundamental improvements were significantly reversing.

A critical concern from our perspective was that the new management team did not seem to have control of Avon's problems after all. In light of the deteriorating fundamentals and the truncated upside potential for the stock, we sold our position.

DISCLAIMER: The investments discussed are held in client accounts as of December 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.

Ironwood Investment Management

Ironwood Investment Management

Ironwood Investment Management is an employee-owned investment management firm based in Boston that formed in 1997. It invests in undervalued

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs