PVH Corp (NYSE:PVH) has soared by 5% in trading today after the company reported better-than-expected results for its fiscal year 2016 first quarter. For the three months ended May 1, PVH earned $1.50 per share on sales of $1.92 billion, beating estimates by $0.07 and $20 million respectively. Sales rose by 2.1% year-over-year, led by a strong performance in the company’s Calvin Klein segment. Guidance was also lifted, with PVH now anticipating EPS of $6.45-to-$6.55 for the full 2016 fiscal year, while its previous guidance had called for EPS of $6.30-to-$6.50.
How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding PVH Corp (NYSE:PVH).
Is PVH Corp (NYSE:PVH) a buy right now? Prominent investors are getting more optimistic. The number of long hedge fund bets improved by 8 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Mobile TeleSystems OJSC (ADR) (NYSE:MBT), Vereit Inc (NYSE:VER), and Aramark (NYSE:ARMK) to gather more data points.
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According to Insider Monkey’s hedge fund database, D E Shaw, founded by David E. Shaw, has the largest position in PVH Corp (NYSE:PVH), worth close to $155.7 million, comprising 0.3% of its total 13F portfolio. Coming in second is Balyasny Asset Management, managed by Dmitry Balyasny, which holds a $143.1 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Cliff Asness’ AQR Capital Management, Alexander Mitchell’s Scopus Asset Management, and Glenn Fuhrman and John Phelan’s MSD Capital.
On the next page we’ll look at some funds that took up positions in PVH Corp during Q1, as well as compare the stock to a handful of others with similar market caps.
As aggregate interest increased, key money managers jumped into PVH Corp (NYSE:PVH) headfirst. Scopus Asset Management initiated the biggest call position in PVH Corp (NYSE:PVH), having $64.4 million invested in the company at the end of the quarter. David Einhorn’s Greenlight Capital also made a $60.9 million investment in the stock during the quarter. The following funds were also among the new PVH investors: David Harding’s Winton Capital Management, Benjamin A. Smith’s Laurion Capital Management, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PVH Corp (NYSE:PVH) but similarly valued. These stocks are Mobile TeleSystems OJSC (ADR) (NYSE:MBT), Vereit Inc (NYSE:VER), Aramark (NYSE:ARMK), and Bunge Ltd (NYSE:BG). This group of stocks’ market valuations match PVH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MBT | 11 | 135524 | -2 |
| VER | 31 | 1089648 | -4 |
| ARMK | 44 | 2012137 | 1 |
| BG | 28 | 845601 | -6 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1.02 billion. That figure was $1.30 billion in PVH’s case. Aramark (NYSE:ARMK) is the most popular stock in this table. On the other hand Mobile TeleSystems OJSC (ADR) (NYSE:MBT) is the least popular one with only 11 bullish hedge fund positions. PVH Corp (NYSE:PVH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ARMK might be a better candidate to consider a long position in.
Disclosure: None
