Topic: How To Invest

Q: Pat: What do you think about Hanesbrands (HBI) for new buying? Thank you.

Article Excerpt

A: Hanesbrands Inc., $6.81, symbol HBI on New York (Shares outstanding: 351.7 million; Market cap: $2.4 billion; www.hanesbrands.com) manufactures apparel such as t-shirts, underwear, bras, and sweatshirts under the Hanes, Champion, Maidenform, and Playtex brands. It has 48,000 employees in 30 countries. In August 2023, activist investor Barington Capital sent a letter to Hanesbrands’ chairman Ronald L. Nelson that called for the board to deliver increased value to its shareholders. Barington noted that the company’s stock has underperformed both the Russell 2000 and S&P 500 indexes over every period dating as far back as 17 years. As a result, the activist wanted to see Hanesbrands reduce its operating expenses by at least $300 million annually, cut the days it holds inventory to less than 170 days (and ultimately get to 150), and improve its profit margins. Further, Barington wanted to see a new CEO and board directors—ones, it argues, are better able to achieve these targets. Notably, Barington is the activist that forced the…