Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Capri Holdings Limited (NYSE:CPRI) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Capri Holdings Limited (NYSE:CPRI) has seen an increase in activity from the world’s largest hedge funds in recent months. Capri Holdings Limited (NYSE:CPRI) was in 46 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. There were 44 hedge funds in our database with CPRI holdings at the end of June. Our calculations also showed that CPRI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to take a glance at the fresh hedge fund action regarding Capri Holdings Limited (NYSE:CPRI).
Peter Rathjens of Arrowstreet Capital
Do Hedge Funds Think CPRI Is A Good Stock To Buy Now?
At Q3’s end, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in CPRI over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Rima Senvest Management was the largest shareholder of Capri Holdings Limited (NYSE:CPRI), with a stake worth $222.7 million reported as of the end of September. Trailing Rima Senvest Management was Arrowstreet Capital, which amassed a stake valued at $113.7 million. Park West Asset Management, Senator Investment Group, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Capri Holdings Limited (NYSE:CPRI), around 6.37% of its 13F portfolio. Masterton Capital Management is also relatively very bullish on the stock, earmarking 4.88 percent of its 13F equity portfolio to CPRI.
As industrywide interest jumped, some big names have been driving this bullishness. GoldenTree Asset Management, managed by Steven Tananbaum, assembled the most valuable position in Capri Holdings Limited (NYSE:CPRI). GoldenTree Asset Management had $36 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $30.3 million investment in the stock during the quarter. The other funds with brand new CPRI positions are Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Marc Majzner’s Clearline Capital, and McKinley Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Capri Holdings Limited (NYSE:CPRI). These stocks are IAA, Inc. (NYSE:IAA), Alaska Air Group, Inc. (NYSE:ALK), PVH Corp (NYSE:PVH), Pearson PLC (NYSE:PSO), Chemed Corporation (NYSE:CHE), Legend Biotech Corporation (NASDAQ:LEGN), and OneMain Holdings Inc (NYSE:OMF). This group of stocks’ market valuations are similar to CPRI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IAA | 33 | 714704 | 0 |
| ALK | 41 | 647583 | 3 |
| PVH | 38 | 2157407 | 10 |
| PSO | 8 | 15064 | 1 |
| CHE | 20 | 272040 | -10 |
| LEGN | 14 | 947002 | -5 |
| OMF | 41 | 1047061 | 0 |
| Average | 27.9 | 828694 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $829 million. That figure was $833 million in CPRI’s case. Alaska Air Group, Inc. (NYSE:ALK) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 8 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 86.4. 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on CPRI as the stock returned 24.1% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Capri Holdings Ltd (NYSE:CPRI)
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Disclosure: None. This article was originally published at Insider Monkey.
