Asset manager Browning West LP sold a quarter of its stake in Gildan Activewear Inc. GIL-T for $181-million this month after leading a successful campaign in the spring to reinstate the T-shirt maker’s founder and replace the board.
Browning West is the latest in a string of Gildan’s institutional investors to sell a portion of their holdings after the Montreal-based company’s share price soared subsequent to the return of chief executive officer Glenn Chamandy in May. In U.S. regulatory filings, Browning West said it needed to take profits after Gildan’s success made it an outsized holding in the Los Angeles-based fund manager’s portfolio.
Last December, Gildan’s board dismissed Mr. Chamandy, then aged 61, over succession issues after 40 years at the company and two decades as chief executive officer. Gildan is one of the world’s largest clothing manufacturers, with a $10.7-billion market capitalization.
In January, Browning West launched a campaign to name a new board and bring back Mr. Chamandy, and revealed a significant stake in the company. Normally low-profile fund managers such as Jarislowsky Fraser Ltd., Turtle Creek Asset Management Inc. and Anson Funds joined the crusade and issued a series of public statements supporting the former CEO.
In May, after a bitter proxy battle that cost the company $82-million, roughly 85 per cent of Gildan shareholders voted to replace the board and hand control back to Mr. Chamandy.
Gildan’s stock price is up by 65 per cent since the boardroom battle began in January. The shares blew through analysts’ price targets this fall as international sales rose and several competitors stumbled, including Berkshire Hathaway Inc.-owned Fruit of the Loom Ltd.
In recent months, filings showed that Jarislowsky, Turtle Creek and Anson all sold a portion of their Gildan holdings. Two other significant shareholders, Fidelity parent FMR LLC and Coliseum Capital Management LLC, also sold more than a million Gildan shares this fall.
This week, Browning West said it sold approximately 2.6 million Gildan shares at $69.50 each. In a filing, the fund manager said it took profits “to effectuate a rebalancing of Browning West’s portfolio in light of the significant appreciation in [Gildan’s] stock price.”
Browning West ”continues to have a positive view on [Gildan’s] future performance,” the filing says. The fund manager continues to own 7.03 million Gildan shares, or 4.5 per cent of the company, a stake worth approximately $485-million.
In late November, prior to the recent stock sale, Browning West managing partner and chief investment officer Usman Nabi said in an e-mail: “We believe Gildan has a strong value creation path ahead of it and look forward to being an engaged and supportive shareholder for many years.”
“We are proud of the role Browning West played to rebuild the governance of Gildan, and to restore Glenn Chamandy’s visionary leadership to an iconic Canadian and Quebec champion,” Mr. Nabi said.
Since Mr. Chamandy’s return to Gildan, his strategy has included ramping up the company’s share-buyback program. Since May, Gildan has bought back 14.3 million of its own shares. The company’s current repurchase plan, set in August, allows Gildan to buy back up to 16 million shares or 10 per cent of its float by August, 2025.