Alcoa Inc.
AA
pitch
long
Austin Kim ’16, McCoy Jen, CFA ’17, Audun Nordtveit ’17
Thesis
Alcoa is set to spin off its value-added business, Arconic, which has significant margin expansion potential. The Engineered Products & Solutions division within Arconic is currently operating at EBITDA margins that are 10% lower than those of its peers, and this gap is expected to close over time, driving growth for Alcoa.
Did it work?
worked
confidence: high
The long thesis on Alcoa has played out successfully, as the stock has increased by 110% since the pitch. The anticipated spin-off of Arconic and the expected margin expansion in the Engineered Products & Solutions division have likely contributed to this positive performance, aligning with the thesis that the gap in EBITDA margins would close over time.
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