The consumer discretionary sector represented about 53% of the equity portfolio investments of Alexander Mitchell‘s Scopus Asset Management as of the end of March according to the fund’s latest 13F filing. We decided to take a closer look at the fund’s top picks in this sector which included Signet Jewelers Ltd. (NYSE:SIG), Hanesbrands Inc. (NYSE:HBI), and Nike Inc (NYSE:NKE). Founded in 1998, the New York-based multi-billion dollar hedge fund uses extensive fundamental research and bottom-up financial analysis to hunt for companies selling at a discount to their intrinsic value. As is characteristic of Scopus, the turnover ratio for the quarter was particularly high, at 74.36%. The market value of its equity portfolio increased substantially to $5.02 billion from $3.83 billion at the end of the previous quarter. Apart from its strong investment in one sector, Scopus was otherwise fairly well-diversified heading into the second quarter, with its top ten holdings representing just 24.81% of the its total portfolio value.
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Coming back to Scopus’ consumer discretionary picks, the top spot was occupied by Signet Jewelers Ltd. (NYSE:SIG) with the fund owning 1.02 million shares valued at $140.88 million. The fund’s largest equity holding was bulked up by 6% during the quarter and represented 2.81% of its portfolio’s value, down from 3.26% at the end of the previous quarter. This was because of the expansion of the portfolio through 91 new purchases and 46 additional purchases on existing holdings. Signet Jewelers Ltd. (NYSE:SIG) is up by nearly 1% year-to-date and 31.56% over the past calendar year. The $10.85 billion specialty retail jeweler acquired the 90-year old jeweler, Zale Corporation for $1.4 billion last year. Signet Jewelers Ltd. (NYSE:SIG) expects the synergies from the acquisition, which amount to somewhere between $150 million and $175 millio, to continue through the end of fiscal 2018. Keith Meister‘s Corvex Capital and Alan Fournier’s Pennant Capital Management are among the largest stockholders of Signet Jewelers Ltd. (NYSE:SIG).
Scopus slashed the stake of its second largest equity holding, Hanesbrands Inc. (NYSE:HBI), by 13% during the first quarter to 3.75 million shares valued at $125.68 million. The stake accounted for 2.5% of the investment firm’s portfolio value. Hanesbrands Inc. (NYSE:HBI) has appreciated by 11.47% so far this year. This compares favorably with the Apparel stores industry, which has gained 5.55% during the same period. The $12.23 billion owner of brands such as Hanes, Champion, Playtex, Bali, Just My Size, Wonderbra and Gear for Sports missed estimates for its first quarter financial results as its EPS of $0.22 came in $0.01 below estimates and revenues of $1.21 billion were also $20 million lower than anticipated. Besides Scopus, another prominent stockholder of the company is John Shapiro‘s Chieftain Capital, which held 2.27 million shares of Hanesbrands Inc. (NYSE:HBI) according to its latest filing.
The third spot was taken by the $87.83 billion global manufacturer of athletic footwear, apparel and accessories, Nike Inc (NYSE:NKE). After acquiring an additional 627,557 shares of the company during the first quarter, Scopus’ holding climbed to 1.25 million shares valued at $125.67 million. Although Nike Inc (NYSE:NKE)’s fiscal third quarter 2015 EPS of $0.89 beat estimates by $0.05, revenues of $7.46 billion came in $160 million lighter than expected. The company performed particularly well at increasing traffic and conversions through mobile devices, which for the first time in Nike Inc (NYSE:NKE)’s history exceeded desktop traffic. The achievement of this milestone was made possible by the newly introduced SNKRS app. Ken Griffin’s Citadel Investment Group, the renowned managed futures fund, held 1.54 million shares of the company at the end of the fourth quarter.
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