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 bargain? The best stock pickers were becoming hopeful. The number of bullish hedge fund positions rose by 2 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. Our calculations also showed that CPRI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 44 hedge funds in our database with CPRI holdings at the end of June.
Steven Tananbaum of GoldenTree Asset Management
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 let’s take a look at the new hedge fund action encompassing Capri Holdings Limited (NYSE:CPRI).
Do Hedge Funds Think CPRI Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 36 hedge funds with a bullish position in CPRI a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Rima Senvest Management held the most valuable stake in Capri Holdings Limited (NYSE:CPRI), which was worth $222.7 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $113.7 million worth of shares. 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 aggregate interest increased, specific money managers were leading the bulls’ herd. GoldenTree Asset Management, managed by Steven Tananbaum, initiated 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 initiated a $30.3 million position during the quarter. The following funds were also among the new CPRI investors: Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Marc Majzner’s Clearline Capital, and McKinley Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Capri Holdings Limited (NYSE:CPRI). We will take a look at 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 resemble 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 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on CPRI as the stock returned 22.3% since the end of September (through 11/30) 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.
