Here is What Hedge Funds Think About Tapestry, Inc. (TPR)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. What do these smart investors think about Tapestry, Inc. (NYSE:TPR)?

Is Tapestry, Inc. (NYSE:TPR) going to take off soon? Hedge funds were in a bearish mood. The number of bullish hedge fund bets were trimmed by 9 lately. Tapestry, Inc. (NYSE:TPR) was in 41 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that TPR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 50 hedge funds in our database with TPR positions at the end of the first quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to analyze the latest hedge fund action surrounding Tapestry, Inc. (NYSE:TPR).

Do Hedge Funds Think TPR Is A Good Stock To Buy Now?

At Q2’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in TPR over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Tapestry, Inc. (NYSE:TPR) was held by Suvretta Capital Management, which reported holding $225.2 million worth of stock at the end of June. It was followed by Holocene Advisors with a $157.7 million position. Other investors bullish on the company included Citadel Investment Group, Anomaly Capital Management, and Atreides Management. In terms of the portfolio weights assigned to each position Anomaly Capital Management allocated the biggest weight to Tapestry, Inc. (NYSE:TPR), around 5.24% of its 13F portfolio. Portland Hill Asset Management is also relatively very bullish on the stock, setting aside 4.35 percent of its 13F equity portfolio to TPR.

Because Tapestry, Inc. (NYSE:TPR) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that slashed their entire stakes last quarter. Intriguingly, Gabriel Plotkin’s Melvin Capital Management sold off the largest stake of the 750 funds followed by Insider Monkey, comprising about $86.5 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dumped about $58.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 9 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tapestry, Inc. (NYSE:TPR) but similarly valued. These stocks are The Mosaic Company (NYSE:MOS), Companhia Siderurgica Nacional (NYSE:SID), Snap-on Incorporated (NYSE:SNA), McAfee Corp. (NASDAQ:MCFE), Host Hotels and Resorts Inc (NASDAQ:HST), Williams-Sonoma, Inc. (NYSE:WSM), and Weibo Corp (NASDAQ:WB). All of these stocks’ market caps resemble TPR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $398 million. That figure was $1129 million in TPR’s case. The Mosaic Company (NYSE:MOS) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 12 bullish hedge fund positions. Tapestry, Inc. (NYSE:TPR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TPR is 67.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately TPR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TPR were disappointed as the stock returned -13.4% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.