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Hedge fund manager’s full-year performance lags that of the S&P 500

Izzy Englander’s hedge fund Millennium Management gained 2.5 per cent in December, bringing returns for 2024 to 15 per cent, according to investors.

The firm is one of the most prominent multi-manager hedge funds, managing $72.1bn across more than 320 investment teams and trading a range of strategies.

Multi-manager hedge funds typically organise traders across a variety of asset classes, all controlled by a centralised risk system designed to prevent big losses.

Englander still owns 100 per cent of Millennium, which he founded in 1989 with assets of just $35mn. Millennium and Ken Griffin’s Citadel are pioneers of multi-manager funds, which in recent years have been the fastest-growing corner of the $4.5tn hedge fund industry.

Millennium’s returns last year lagged those of the S&P 500, the index of US blue-chip companies, which rose 23 per cent on the back of big gains for a handful of tech companies.

Millennium declined to comment.

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Despite an up market, fashion had a mixed year on Wall Street, when leadership won out.

Both bulls and bears were out on Wall Street last year.

While the market overall was up — the S&P 500 gained 23.3 percent for the year, buoyed by a stable economy and lower interest rates — fashion had its mix of winners and losers.

There were some broad trends. Luxury shares, in particular, were hit hard by the high-end slowdown and weakness in China, delivering share losses to even the mighty LVMH Moët Hennessy Louis Vuitton, which fell 11.7 percent. Other high-end players in turnaround mode, like Kering, Burberry and Versace-owner Capri, were hit even harder.

“You could see a lot of those luxury manufacturers suffering in terms of stock price,” said consultant Greg Portell, senior partner and global markets lead at Kearney. “They may have pushed the consumer a bit too far and started to get the value to price equation out of whack.”

Luxury brands reaped big rewards as they jacked up prices over the pandemic, when consumers spent big on goods and pulled back on services and experiences.

But those companies paid the price in 2024 as even wealthy shoppers began to balk at the level of increases.

But many fashion stocks were driven not as much by broader trends as their own circumstances.

“The market rewards growth trajectory almost more than profit and the ability of those companies to seize market opportunity and drive revenue growth is being rewarded in the stock valuation,” Portell said.

The larger message Portell drew from a decidedly mixed year for fashion was how a strong management team can help a company pull away from its peers.

And across the spectrum, brands were all at once looking to get fresh faces at the top.

A WWD tally last month found more than 50 companies across fashion, retail and beauty that named a new chief executive officer, including Burberry, Nike, Gucci, Estée Lauder, Macy’s, H&M, Michael Kors, Kate Spade and more.

Some of those CEO shifts have brought big changes.

Take Elliott Hill, the Nike veteran who returned to the company in October, taking the CEO reins from John Donahoe.

Nike’s stock fell 29.1 percent last year and Hill is now looking to turn that around. He diagnosed the problem in part by saying the sports giant had gotten away from creating demand and was instead “capturing the demand through performance marketing for our digital business.”

“We lost our obsession with sport,” the CEO said. “Moving forward, we will lead with sport and put the athlete at the center of every decision. The sharpness in each sport is what differentiates our brand and our business and fuels our culture.”

CEO decisions mattered in 2024, which was not a rising-tide-lifts-all-boats kind of year.

Portell said: “This is the first opportunity in a long time that we’ve had to really see the results of strong management and strong management execution. Over the past five to 10 years it’s either been the pandemic or it’s been a great consumer that’s universally helped all boats rise. Now we’re starting to see the differentiation and we’re really starting to see the power of strong management choices.”

But there’s something better than just a good CEO — a good CEO with a system and a team.

“Good talent is spiky and can have hits and misses,” Portell said. “A good operating system starts to connect those dots in ways that are unique and does require a team that is well constructed, knows how to work together, knows where to push the limits.”

Portell pointed to Walmart as “a great example of an operating system.”

“They are able to take whatever direction they want and they feel is right and move it through a massive organization to execution almost flawlessly,” he said. “That doesn’t mean they don’t have their challenges, but they have a very consistent way of choosing a path.”

Walmart is in the midst of a tricky reworking, evolving from being just the brick-and-mortar giant to a much more complicated approach that includes an online marketplace, a digital advertising business and a truly omnichannel positioning.

So far, Walmart is doing that well. The company’s stock rose 74 percent last year, adding $301 billion to its market cap, which tops $725 billion.

An operating system indeed.

Now Walmart just has to keep it up and most of the rest of the industry has to catch up.

The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears every other Thursday.

Sun Art deal is ecommerce group’s second major divestment of bricks-and-mortar assets in less than a month

Alibaba has agreed to sell its entire stake in China’s largest hypermarket operator at a steep discount, as it sharpens its focus on core ecommerce operations amid intensifying competition.

The Chinese tech group will sell its 73.7 per cent stake in Sun Art Retail to private equity firm DCP Capital at HK$1.75 per share, the company disclosed in a filing on Wednesday evening, after the shares had closed the day at $2.48.

The sale is expected to raise gross proceeds of up to $1.7bn, but will mean a loss of Rmb13.2bn ($1.8bn) for Alibaba shareholders when the deal is completed, it added.

Sun Art’s Hong Kong-listed shares plunged as much as 35 per cent on Thursday before narrowing losses to 17 per cent. Alibaba’s shares slipped 0.7 per cent.

The Sun Art deal came after Alibaba’s exit from Intime Retail Group in December, marking Alibaba’s second major divestment of bricks-and-mortar assets in less than a month. The department store chain was sold to a consortium including clothes retailer Youngor Group and Intime’s management team for $1bn, less than half what Alibaba had paid for it seven years earlier.

The quick sales of Sun Art — the biggest hypermarket operator by number of stores and staff — and Intime at significant discounts underscore the urgency of Alibaba’s pivot back to its ecommerce roots in a bid to sustain growth and strengthen competitiveness.

Once a dominant force in Chinese ecommerce, Alibaba is now racing to counter heightened competition from rivals such as Temu owner Pinduoduo, while retreating from unprofitable expansions into non-core businesses that have weighed on returns.

Alibaba said in its filing that the sale of Sun Art represented “a good opportunity to monetise non-core assets and redeploy proceeds to focus on developing its core businesses and enhancing shareholder returns”.

The group first invested in Sun Art in 2017, with it later taking majority control in 2020 in a HK$28bn (US$3.6bn) deal with France’s Mulliez family. The move was part of its ambitious strategy begun in 2016 to create a “new retail” model blending online and offline shopping experiences.

However, the vision of a retail empire that connects ecommerce and physical stores faltered amid the shock of the pandemic and an economic slowdown that curbed consumer spending in China.

In November, Alibaba announced plans to merge its domestic and international ecommerce operations into a single unit under chief executive Jiang Fan, a move viewed as key to Alibaba’s future strategy.

Alibaba still retains smaller holdings in other traditional Chinese retailers including Suning.com. It is also restructuring the business strategy of its grocery chain Hema, or Freshippo, to increase profitability.