Benchmarking the performance of Zulily
The primary reason behind investing in a stock over a benchmark, or engaging in active investing over mere replication of a benchmark portfolio, is to earn excess returns. As observed in the table below, Zulily (ZU) has performed poorly during the year, generating negative 40.30% returns to its shareholders thus far in 2015.
While the online retail sector in general, as measured by XRT, has outperformed the overall market, ZU has suffered more due to its disappointing quarterly results and weaker outlook. Zulily’s underperformance in comparison to its benchmarks could be a reason why Citadel Advisors exited its position in the company.
ZU’s performance versus its competitors
Of the components of the XRT ETF, which has technology weights of about 2%, the average YTD (year-to-date) performance has been 3.61%. In fact, ZU’s return so far in 2015 has been negative 40.3%. Other peers in the space like eBay (EBAY), Alibaba (BABA), and Amazon (AMZN), had YTD returns of 3.81%, -21.79%, and 35.9%, respectively. Therefore, Zulily has underperformed considerably as compared to its competitors.
Given that the company has underperformed all of its benchmarks, Citadel’s exit from ZU seems to be timed appropriately.