Private-label credit card issuer Alliance Data (ADS, Financial) cut 263 basis points from the Fund’s return, as the stock fell 69.8% from $112.20 to $33.65. Alliance’s retail partners have been hit hard by the sharp drop in retailing, because of the coronavirus, so the company’s revenue for operating retailers’ credit card programs will drop substantially. Meanwhile, the recent jump in unemployment could lead to rising credit losses. We’ve decided to hold onto the stock, because we believe the company has the capital to withstand the economic turbulence, and we expect the company should emerge stronger when the economy recovers, because of steps taken by new CEO Ralph Andretta.
From Jerome Dodson (Trades, Portfolio)'s Parnassus Endeavor Fund (Trades, Portfolio) first-quarter 2020 shareholder commentary.
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