WTW: Covering Short

Takeaway: No fundamental change to thesis. WTW just isn't interesting anymore.

We shorted WTW back in January 2014 when the jury was still out on its questionable prospects within a rapidly evolving industry.  That debate is over.  Now it's just a question of whether the company will go bankrupt.  

As a reminder, WTW is dangerously approaching the point where it costs more to acquire its members than the gross margin it earns from them.  If that ever happens, it’s basically game over.  WTW’s 2015 target of $290M in cash can only go so far with an annual debt service of roughly $120M.  For more detail, see the note below.

WTW: Chapter 11?

02/27/15 08:46 AM EST

[click here]

Let us know if you have any questions or would like to discuss in more detail. 

Hesham Shaaban, CFA

@HedgeyeInternet

Thomas Tobin

@HedgeyeHC