Hedge Funds Are Betting On Coach, Inc. (COH)

Coach, Inc. (NYSE:COH) was in 37 hedge funds’ portfolio at the end of March. COH investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. There were 31 hedge funds in our database with COH holdings at the end of the previous quarter.

In the eyes of most market participants, hedge funds are viewed as unimportant, old financial vehicles of years past. While there are more than 8000 funds with their doors open at the moment, we choose to focus on the masters of this club, about 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total asset base, and by paying attention to their best investments, we have figured out a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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).

Just as key, bullish insider trading sentiment is another way to parse down the investments you’re interested in. There are a number of stimuli for a corporate insider to sell shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this tactic if “monkeys” understand where to look (learn more here).

Now, it’s important to take a peek at the recent action encompassing Coach, Inc. (NYSE:COH).

How are hedge funds trading Coach, Inc. (NYSE:COH)?

At Q1’s end, a total of 37 of the hedge funds we track held long positions in this stock, a change of 19% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Ariel Investments, managed by John W. Rogers, holds the most valuable position in Coach, Inc. (NYSE:COH). Ariel Investments has a $39.5 million position in the stock, comprising 0.7% of its 13F portfolio. On Ariel Investments’s heels is Two Sigma Advisors, managed by John Overdeck and David Siegel, which held a $33.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Crispin Odey’s Odey Asset Management Group, John Horseman’s Horseman Capital Management and Ken Griffin’s Citadel Investment Group.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Ariel Investments, managed by John W. Rogers, assembled the most valuable position in Coach, Inc. (NYSE:COH). Ariel Investments had 39.5 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $33.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Crispin Odey’s Odey Asset Management Group, Curtis Macnguyen’s Ivory Capital (Investment Mgmt), and Matt Sirovich and Jeremy Mindich’s Scopia Capital.

What do corporate executives and insiders think about Coach, Inc. (NYSE:COH)?

Bullish insider trading is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time frame, Coach, Inc. (NYSE:COH) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Coach, Inc. (NYSE:COH). These stocks are Iconix Brand Group Inc (NASDAQ:ICON), Steven Madden, Ltd. (NASDAQ:SHOO), Deckers Outdoor Corp (NASDAQ:DECK), Wolverine World Wide, Inc. (NYSE:WWW), and NIKE, Inc. (NYSE:NKE). This group of stocks are the members of the textile – apparel footwear & accessories industry and their market caps are similar to COH’s market cap.

With the returns exhibited by our tactics, retail investors must always watch hedge fund and insider trading activity, and Coach, Inc. (NYSE:COH) shareholders fit into this picture quite nicely.

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