Fifth & Pacific Companies Inc (FNP): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Fifth & Pacific Companies Inc (NYSE:FNP) was in 28 hedge funds’ portfolio at the end of the first quarter of 2013. FNP shareholders have witnessed an increase in hedge fund interest in recent months. There were 21 hedge funds in our database with FNP holdings at the end of the previous quarter.

To most market participants, hedge funds are seen as worthless, old financial vehicles of years past. While there are over 8000 funds trading at present, we choose to focus on the aristocrats of this club, about 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total capital, and by watching their best picks, we have uncovered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as key, bullish insider trading sentiment is another way to break down the investments you’re interested in. Obviously, there are plenty of motivations for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the key action encompassing Fifth & Pacific Companies Inc (NYSE:FNP).

What have hedge funds been doing with Fifth & Pacific Companies Inc (NYSE:FNP)?

In preparation for this quarter, a total of 28 of the hedge funds we track were bullish in this stock, a change of 33% from the first quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Barry Rosenstein’s JANA Partners had the largest position in Fifth & Pacific Companies Inc (NYSE:FNP), worth close to $99.2 million, accounting for 2.1% of its total 13F portfolio. The second largest stake is held by Scopus Asset Management, managed by Alexander Mitchell, which held a $95.7 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Ken Fisher’s Fisher Asset Management, Keith Meister’s Corvex Capital and Robert Pohly’s Samlyn Capital.

As one would reasonably expect, key money managers have been driving this bullishness. Sigma Capital Management, managed by SAC Subsidiary, assembled the biggest position in Fifth & Pacific Companies Inc (NYSE:FNP). Sigma Capital Management had 11.8 million invested in the company at the end of the quarter. David Keidan’s Buckingham Capital Management also made a $11 million investment in the stock during the quarter. The following funds were also among the new FNP investors: Jim Simons’s Renaissance Technologies, Daniel Lascano’s Lomas Capital Management, and Louis Bacon’s Moore Global Investments.

What have insiders been doing with Fifth & Pacific Companies Inc (NYSE:FNP)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time frame, Fifth & Pacific Companies Inc (NYSE:FNP) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Fifth & Pacific Companies Inc (NYSE:FNP). These stocks are Gildan Activewear Inc (USA) (NYSE:GIL), Hanesbrands Inc. (NYSE:HBI), Carter’s, Inc. (NYSE:CRI), UniFirst Corp (NYSE:UNF), and Columbia Sportswear Company (NASDAQ:COLM). This group of stocks belong to the textile – apparel clothing industry and their market caps are similar to FNP’s market cap.

With the returns demonstrated by the aforementioned studies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Fifth & Pacific Companies Inc (NYSE:FNP) is no exception.

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