While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Tapestry, Inc. (NYSE:TPR).
Hedge fund interest in Tapestry, Inc. (NYSE:TPR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TPR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare TPR to other stocks including Watsco Inc (NYSE:WSO), agilon health inc. (NYSE:AGL), and Oak Street Health, Inc. (NYSE:OSH) to get a better sense of its popularity.
David Siegel of Two Sigma Advisors
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. With all of this in mind let’s take a peek at the key hedge fund action regarding Tapestry, Inc. (NYSE:TPR).
Do Hedge Funds Think TPR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TPR over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Suvretta Capital Management was the largest shareholder of Tapestry, Inc. (NYSE:TPR), with a stake worth $199.1 million reported as of the end of September. Trailing Suvretta Capital Management was Antipodes Partners, which amassed a stake valued at $77.2 million. Citadel Investment Group, Holocene Advisors, and Two Sigma Advisors 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 Portland Hill Asset Management allocated the biggest weight to Tapestry, Inc. (NYSE:TPR), around 4.03% of its 13F portfolio. Suvretta Capital Management is also relatively very bullish on the stock, earmarking 3.34 percent of its 13F equity portfolio to TPR.
Since Tapestry, Inc. (NYSE:TPR) has witnessed falling interest from the aggregate hedge fund industry, we can see that there was a specific group of fund managers who sold off their positions entirely by the end of the third quarter. Intriguingly, Gavin Baker’s Atreides Management cut the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $75.6 million in stock. Alok Agrawal’s fund, Bloom Tree Partners, also cut its stock, about $27.7 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Tapestry, Inc. (NYSE:TPR). These stocks are Watsco Inc (NYSE:WSO), agilon health inc. (NYSE:AGL), Oak Street Health, Inc. (NYSE:OSH), QuantumScape Corporation (NYSE:QS), CureVac N.V. (NASDAQ:CVAC), First Solar, Inc. (NASDAQ:FSLR), and Brookfield Renewable Partners L.P. (NYSE:BEP). This group of stocks’ market values are similar to TPR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WSO | 30 | 414892 | 4 |
| AGL | 18 | 270101 | 18 |
| OSH | 19 | 395210 | -14 |
| QS | 25 | 197413 | -1 |
| CVAC | 10 | 45690 | -2 |
| FSLR | 31 | 266584 | 0 |
| BEP | 17 | 145164 | -3 |
| Average | 21.4 | 247865 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $248 million. That figure was $887 million in TPR’s case. First Solar, Inc. (NASDAQ:FSLR) is the most popular stock in this table. On the other hand CureVac N.V. (NASDAQ:CVAC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Tapestry, Inc. (NYSE:TPR) is more popular among hedge funds. Our overall hedge fund sentiment score for TPR is 79.6. 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 TPR as the stock returned 8.4% 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 Tapestry Inc. (NYSE:TPR)
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Disclosure: None. This article was originally published at Insider Monkey.
