Should You Consider Selling Skechers U.S.A. (SKX)?

Investment management company Cove Street Capital recently released its “Small Cap Value Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund returned 7.82% compared to 6.23% for the Russell 2000 Index and 8.42% for the Russell 2000 Value Index. In 2022, the fund returned -10.34% compared to -20.44% decline for the Russell 2000 Index and -14.48% decline for the Russell 2000 Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Cove Street Capital highlighted stocks like Skechers U.S.A., Inc. (NYSE:SKX) in its Q4 2022 investor letter. Headquartered in Manhattan Beach, California, Skechers U.S.A., Inc. (NYSE:SKX) is a footware company that operates through Domestic Wholesale, International Wholesale, and Direct-to-Consumer. On January 11, 2023, Skechers U.S.A., Inc. (NYSE:SKX) stock closed at $46.48 per share. One-month return of Skechers U.S.A., Inc. (NYSE:SKX) was 10.93%, and its shares gained 4.90% of their value over the last 52 weeks. Skechers U.S.A., Inc. (NYSE:SKX) has a market capitalization of $7.209 billion.

Cove Street Capital made the following comment about Skechers U.S.A., Inc. (NYSE:SKX) in its Q4 2022 investor letter:

“We sold out of Skechers U.S.A., Inc. (NYSE:SKX), which was one of our “what should we be buying in the Covid Crash of 2020” stocks. While we think the brand has enormous global value and appeal, the Achilles heel has always been the existence of voting control stock that enables the founding family to essentially run this like a captive weekend lemonade stand with all that attendant discipline to cost and interest in shareholder returns. We generated a solid return in the name but have difficulty seeing an interest in a path that raises margins 50% which would still put them below their peers. We think we can do better.”

Photo by Raka Rachgo on Unsplash

Skechers U.S.A., Inc. (NYSE:SKX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held Skechers U.S.A., Inc. (NYSE:SKX) at the end of the third quarter, which was 31 in the previous quarter.

We discussed Skechers U.S.A., Inc. (NYSE:SKX) in another article and shared world-class shoe stocks to buy. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.

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