For the quarter, there were two stocks that cut 60 bps or more off the Fund’s return, but there were five that added 60 bps or more. The one that hurt us the most was Hanesbrands (NYSE:HBI), a leading manufacturer of undergarments and athletic apparel, which subtracted 77 bps from the Fund’s return, as its stock sank from $22.02 to $18.43 for a negative total return of 15.6% (for this report, we will quote total return to the portfolio, which includes price change and dividends). The sharp price drop was due to the decision by Target to discontinue Hanesbrands’ “C9 Champion” apparel brand when the exclusive contract ends in January of 2020. Despite the lost future revenue, management remained confident in the long-term growth of the Champion brand. During the second quarter, Champion global sales increased 18%. Outside the U.S. mass-market, which includes Target, Champion activewear grew 70%. Contributing to this impressive growth were strong consumer demand, increasing online sales and more shelf space at specialty retailers.
From Jerome Dodson (Trades, Portfolio)'s third-quarter 2018 Endeavor Fund shareholder letter.
