Gildan's Strategic Shift: Why a Top Shareholder Trimmed Its Position After HanesBrands Deal

Ararat Capital Management just made a notable move with its Gildan Activewear (NYSE:GIL) holdings, reducing exposure by 137,548 shares during Q3—a $4.9 million reduction according to November SEC filings. But here’s the twist: this looks less like losing faith and more like repositioning ahead of a major transformation.

The Numbers Behind the Move

The Connecticut-based fund now holds 217,685 Gildan shares worth $12.6 million, keeping it as their fifth-largest position at 6.7% of reportable assets. This follows Ararat’s broader portfolio adjustment as markets digest what’s arguably the most significant reshaping of the apparel manufacturing space in recent years.

As of Thursday, Gildan Activewear shares traded at $58.52, delivering 17% returns over the past 12 months—modestly outpacing the S&P 500’s nearly 13% gain in the same window. The stock’s resilience suggests institutional conviction remains despite tactical position trims.

The Real Story: Integration Phase Changes Everything

The reason this reduction matters isn’t about doubt—it’s about timing and scale. Gildan completed its acquisition of HanesBrands, fundamentally expanding what the company does. The combined entity now controls an iconic apparel empire: Champion, Maidenform, Playtex, and the original Gildan portfolio join forces, creating $200 million in projected run-rate cost synergies by consolidation.

That’s not a minor refresh. This transforms Gildan Activewear from a lean, cost-focused manufacturer into a vertically integrated global powerhouse spanning multiple consumer segments and geographies. When a company doubles in scale and mission within months, even believers recalibrate position sizes to reflect the enlarged risk-reward landscape.

Growth Meets Integration Headwinds

Third-quarter results underscore the complexity: revenue hit a record $911 million, yet net income dipped to $120.2 million from $131.5 million year-over-year. The core business remains cyclical, and integrating two massive operations creates operational friction in the near term.

But dig deeper and the structural advantage emerges—deeper supplier relationships, broader retail access across North America, Europe, Asia-Pacific, and Latin America, plus enhanced vertical integration across the Western Hemisphere. Gildan enters 2025 as something fundamentally different: a multi-brand, multi-channel distributor rather than a single-focus apparel producer.

What Investors Should Watch

Ararat Capital’s move signals confidence without complacency. Trimming 38% of holdings while retaining $12.6 million as a top-five position says: “We believe in the future, but we’re acknowledging the transition carries execution risk.”

The next 12-18 months will reveal whether those $200 million synergies materialize and if Gildan Activewear can maintain pricing power and margins through the integration. That’s the real test—not the quarterly positions, but whether this newly scaled competitor can prove it’s worth the complexity.