Capri Holdings Limited (CPRI): Hedge Funds Are Cashing Out?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Capri Holdings Limited (NYSE:CPRI).

Is Capri Holdings Limited (NYSE:CPRI) a healthy stock for your portfolio? Prominent investors were getting less bullish. The number of long hedge fund positions went down by 3 in recent months. Capri Holdings Limited (NYSE:CPRI) was in 44 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 47. Our calculations also showed that CPRI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 47 hedge funds in our database with CPRI positions at the end of the first quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Steven Cohen of Point72 Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a look at the recent hedge fund action surrounding Capri Holdings Limited (NYSE:CPRI).

Do Hedge Funds Think CPRI Is A Good Stock To Buy Now?

At the end of June, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in CPRI a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Richard Mashaal’s Rima Senvest Management has the number one position in Capri Holdings Limited (NYSE:CPRI), worth close to $237.3 million, accounting for 6.9% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $136 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Doug Silverman and Alexander Klabin’s Senator Investment Group, Steve Cohen’s Point72 Asset Management and Robert Pohly’s Samlyn Capital. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Capri Holdings Limited (NYSE:CPRI), around 6.91% of its 13F portfolio. Portland Hill Asset Management is also relatively very bullish on the stock, setting aside 5.25 percent of its 13F equity portfolio to CPRI.

Due to the fact that Capri Holdings Limited (NYSE:CPRI) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of money managers who sold off their positions entirely in the second quarter. Interestingly, Anand Parekh’s Alyeska Investment Group said goodbye to the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $16.7 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund said goodbye to about $7.5 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Capri Holdings Limited (NYSE:CPRI) but similarly valued. We will take a look at Jabil Inc. (NYSE:JBL), Ares Capital Corporation (NASDAQ:ARCC), Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR), Skillz Inc. (NYSE:SKLZ), Kohl’s Corporation (NYSE:KSS), Oshkosh Corporation (NYSE:OSK), and Autoliv Inc. (NYSE:ALV). This group of stocks’ market caps match CPRI’s market cap.

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As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $644 million. That figure was $891 million in CPRI’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand Ares Capital Corporation (NASDAQ:ARCC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Capri Holdings Limited (NYSE:CPRI) is more popular among hedge funds. Our overall hedge fund sentiment score for CPRI is 80.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately CPRI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CPRI were disappointed as the stock returned -12.9% since the end of the second quarter (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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