Tiffany & Co. (NYSE:TIF) reported soft earnings for the first quarter this morning, with the company delivering EPS of $0.64 on revenue of $891.3 million for the quarter, missing estimates by $0.04 and $23.64 million respectively. Sales fell by 7.4% year-over-year as comparable-store sales dropped by 9% year-over-year. Net sales were lower in all regions except Japan. In better news however, gross margin rose to 61.2% from 59.1% and the company bought back $78 million of its stock during the quarter. As of April 30, the company had $416 million available for repurchases. Lastly, management’s outlook was soft, with them forecasting full-year earnings to suffer a dip in the mid-single digit-range, percentage-wise, from 2015’s earnings. Shares of the company are off by 1.69% in morning trading.
Tiffany & Co. (NYSE:TIF) has experienced a decrease in hedge fund interest of late. TIF was in 26 hedge funds’ portfolios at the end of the first quarter of 2016. There were 29 hedge funds in our database with TIF positions at the end of the previous quarter. 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 Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC), Interpublic Group of Companies Inc (NYSE:IPG), and KeyCorp (NYSE:KEY) to gather more data points.
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We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
When looking at the institutional investors followed by Insider Monkey, Shane Finemore’s Manikay Partners has the most valuable position in Tiffany & Co. (NYSE:TIF), worth close to $73.4 million, accounting for 4.2% of its total 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $28.5 million position; 0.1% of his firm’s 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism comprise Kerr Neilson’s Platinum Asset Management, Joel Greenblatt’s Gotham Asset Management, and Richard Chilton’s Chilton Investment Company.
On the next page we’ll look at some funds that moved out of positions in Tiffany & Co. during Q1, as well as compare the stock to a handful of others with similar market caps.
Because Tiffany & Co. (NYSE:TIF) has faced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers that decided to sell off their entire stakes by the end of the first quarter. It’s worth mentioning that Rob Citrone’s Discovery Capital Management said goodbye to the largest position of all the hedgies monitored by Insider Monkey, valued at close to $55.7 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund cut about $48.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks similar to Tiffany & Co. (NYSE:TIF). These stocks are Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC), Interpublic Group of Companies Inc (NYSE:IPG), KeyCorp (NYSE:KEY), and Cimarex Energy Co (NYSE:XEC). This group of stocks’ market valuations are closest to TIF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TKC | 5 | 4784 | -2 |
| IPG | 37 | 1768490 | 0 |
| KEY | 40 | 1067462 | 7 |
| XEC | 32 | 819123 | -5 |
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 $915 million. That figure was $372 million in TIF’s case. KeyCorp (NYSE:KEY) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC) is the least popular one with only 5 bullish hedge fund positions. Tiffany & Co. (NYSE:TIF) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KEY might be a better candidate to consider a long position.
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