Tiffany & Co. (NYSE:TIF) was one of Cohen’s top five stock picks for the quarter with a position of 3.2 million shares, a large increase from the fund’s holdings three months earlier. In its most recent fiscal quarter, ending in October, Tiffany’s earnings were down 30% from a year ago despite rising revenue. With the stock price also down over the last year, though slightly, the trailing P/E is 18. Trian Partners cut its stake last quarter but still had 1 million shares in its portfolio; Trian is managed by activist investor (and billionaire) Nelson Peltz (check out Peltz’s favorite stocks). We think that we would avoid it.
Growth play Michael Kors Holdings Ltd (NYSE:KORS) was another of SAC’s retail picks, with the fund adding shares during the quarter. Kors trades at 40 times trailing earnings, but we’d hesitate to call it overvalued as net income more than doubled last quarter versus a year earlier off of a 74% increase in sales. The five-year PEG ratio is 1.1, indicating that analyst estimates have its growth rate high enough over the next several years to come very close to its valuation. We would need to see continued growth from the company, pulling its multiples into more reasonable territory. Otherwise we think that an investment would still be too speculative.
Cohen and his team reported a position of 2.6 million shares in Nordstrom, Inc. (NYSE:JWN). The retailer reported double-digit percentage increases in revenue and earnings in its most recent fiscal quarter compared to the same period in the previous year. It trades at 16 times trailing earnings, so while Nordstrom is not a pure value stock it would be a good buy if it can continue those growth rates. Wall Street analyst estimates imply a forward P/E of 13. Vinik Asset Management, managed by former Fidelity Magellan manager Jeffrey Vinik, roughly doubled its holdings in Nordstrom (see more stocks Vinik was buying).
The fund initiated a position of 1.4 million shares in Fossil, Inc. (NASDAQ:FOSL), which also looks like a “growth at reasonable price” prospect. The stock carries trailing and forward P/E multiples of 18 and 15, respectively, but Fossil has been recording good numbers on the bottom line. Renaissance Technologies, founded by billionaire Jim Simons, also bought stock in the company during the third quarter after not having owned any shares at the end of June (check out Renaissance’s favorite stocks). Our impression is that it would be worth it to take a closer look at the company.
SAC moved heavily into Simon Property Group, Inc. (NYSE:SPG), which owns malls and other retail centers and is organized as a real estate investment trust. Billionaire Ken Griffin’s Citadel Investment Group also liked Simon during the third quarter, initiating a position of 1.4 million shares (find more stock picks from Ken Griffin). The stock is up 25% in the last year, which has brought it to a market cap of $48 billion. At current prices, the dividend yield is about 3%. We don’t think that we would buy the stock.
