Avon Products Inc's top investor, Cerberus Capital Management, said the cosmetics company did not have any liquidity concerns and that it was "significantly undervalued."

The hedge fund's comments lifted Avon's shares as much as 14.8 percent to $2.79, reversing earlier declines.

Cerberus, which bought a nearly 17 percent stake in Avon last month, said at the company's investor day conference that it would work "hand and glove" with Avon’s management to effect a turnaround of the company.

The hedge fund's stake is in the form of preferred shares that are convertible into Avon common stock at $5 per share.

Earlier at the conference, the company laid out plans to cut costs by $350 million over the next three years.

Avon has seen sales decline for nearly four years as it struggles to cater to changing consumer tastes that prefer niche brands amid intense competition from bigger rivals such as Estee Lauder Cos Inc and L'Oreal SA.

It has also seen a significant drop in the number of its famous "Avon Ladies" - representatives who are known for selling its cosmetics door to door.

Analysts have questioned whether Avon's pioneering direct selling model is effective in the current retailing environment and if the company has enough money to continue running its business.

Steven Mayer, senior managing director at Cerberus Capital, said direct-selling was not a dying business model and added that there were "zero concerns about liquidity" at Avon.

Avon's turnaround plan includes cutting jobs, pouring more money to revamp its technology and services, and seeking alternatives for its China business, which represents about 1 percent of total sales.

The company's sales have taken a beating in China after its Chinese unit pleaded guilty in 2014 in connection with its executives bribing government officials.

Avon also said in a statement on Thursday it expected revenue to grow by 2 percent in 2015 on a constant currency basis, excluding results from its North America business.

Shareholder Barington Capital, which had been critical of Avon's deal with Cerberus, was not available for comment.

Avon trades at 8.5 times forward earnings, compared with the sector median of 22.44 times, according to Thomson Reuters StarMine data.