Investor Dumps $10.9 Million in Grocery Outlet Stock as Shares Continue Multi-Year Downtrend

On November 14, Stadium Capital Management disclosed a complete exit from Grocery Outlet Holding Corp. (NASDAQ:GO), reducing its position by 877,860 shares in an estimated $10.9 million change.

What Happened

According to a U.S. Securities and Exchange Commission (SEC) filing published November 14, Stadium Capital Management sold out of Grocery Outlet Holding during the third quarter. The fund had previously reported holding 877,860 shares in the prior period and now reports a zero-share position. The estimated transaction value, based on quarterly average prices, was $10.9 million.

What Else to Know

The complete exit brings the position from 10% of the fund’s AUM as of the previous quarter to zero as of September 30.

Top holdings after the filing:

• NYSE:BLDR: $22.2 million (23.7% of AUM)
• NYSE:BC: $19.5 million (20.8% of AUM)
• NASDAQ:SNBR: $18.4 million (19.6% of AUM)
• NYSE:NSP: $13 million (13.9% of AUM)
• NYSE:LCII: $8.9 million (9.6% of AUM)

As of Friday's market close, shares of Grocery Outlet Holding Corp. were priced at $11.13, down 48% over the past year and well underperforming the S&P 500, which is up 14% in the same period.

Company Overview

Company Snapshot

Grocery Outlet Holding Corp. operates a large network of independently run discount grocery stores across the United States, leveraging a flexible sourcing strategy to deliver value-priced products. The company’s business model centers on procuring surplus and closeout goods, which supports its competitive pricing and appeals to cost-conscious consumers. This approach enables Grocery Outlet to maintain a differentiated position in the grocery retail sector, focusing on affordability and variety for its target market.

Foolish Take

A complete exit from a top holding often signals that an investor's confidence in the turnaround timeline has meaningfully shifted—and Grocery Outlet’s uneven post-IPO trajectory helps explain why. Shares remain nearly 50% lower over the past year and more than 75% below their peak. The retailer’s latest quarter showed modest top-line growth but continued bottom-line strain: Net sales rose 5.4% to $1.2 billion, yet net income fell by more than half to $11.6 million and adjusted EBITDA slipped to $66.7 million, or 5.7% of sales.

Stadium Capital’s full divestiture—previously a 10% portfolio position—reduces exposure to a business still navigating a large restructuring plan, softer comparable-store sales, and higher SG&A. Management is leaning on a refresh program to reinvigorate growth, with early pilots showing encouraging results, but a broad rollout brings execution risk as cost pressures remain elevated.

For long-term investors, the reset may ultimately create an opportunity if the operational rebuild delivers—but near-term visibility remains limited.

Glossary

13F AUM: The total value of assets a fund reports in its quarterly SEC Form 13F filing.
Stake: The ownership interest or investment a fund holds in a particular company or asset.
Net position change: The difference in the number or value of shares held by a fund before and after a transaction.
Allocated: The portion of a fund’s assets designated for a particular investment or holding.
Quarterly average prices: The average share price of a security over a specific quarter, used for estimating transaction values.
Complete exit: When an investor or fund sells all shares of a particular holding, reducing its position to zero.
AUM (Assets Under Management): The total market value of investments managed by a fund or investment firm.
Independently operated stores: Retail outlets run by individual owners under a larger brand, not directly managed by the parent company.
Flexible sourcing strategy: A procurement approach allowing a company to buy goods from various suppliers based on availability and price.
Surplus and closeout goods: Products purchased in excess or at the end of their lifecycle, often sold at discounted prices.
Differentiated position: A unique market stance that distinguishes a company from its competitors.
TTM: The 12-month period ending with the most recent quarterly report.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Brunswick, LCI Industries, and Sleep Number. The Motley Fool has a disclosure policy.