Our worst performer was Alliance Data Systems (NYSE:ADS), the leading private-label credit card issuer. It subtracted 102 basis points from the Fund’s performance, as the stock’s total return was a loss of 19.6%. (For this report, we will quote total return to the portfolio, which includes price change and dividends.) The shares fell after the company sold its marketing segment, Epsilon, for net proceeds of $3.5 billion, which was below investors’ expectations. The stock fell again later in the quarter after the company’s long-time CEO, Ed Heffernan, abruptly retired. We’re excited that Melisa Miller has been promoted to CEO, and we believe she can reinvigorate the company. We expect the stock to move significantly higher as Alliance Data repurchases stock with proceeds from the Epsilon sale and its loan growth accelerates, thanks to recent partnership wins with Sephora, Burlington Stores and IKEA.
From Parnassus Fund's second-quarter 2019 commentary.
