What Hedge Funds Think About Popular Apparel Stocks

#3 Ralph Lauren Corp (NYSE:RL)

 – Investors with long positions (as of March 31) : 30

 – Aggregate value of Investors’ holdings (as of March 31): $405.18 million

Ownership of Ralph Lauren Corp (NYSE:RL) among the funds we track inched up by one in the first quarter, while the aggregate value of their holdings in it fell by $62.3 million amid a 13.23% drop in the stock. Shares of Ralph Lauren Corp took a big hit in February after the company reported a 39% year-over-year decline in its fiscal third quarter earnings and lowered its fiscal year 2016 revenue guidance. Though Ralph Lauren reported better than expected numbers for its fiscal fourth quarter of 2016, its stock hasn’t been able to recover much and currently trades down by 16.5% year-to-date. On May 20, analysts at BB&T Corp. initiated coverage on the stock with a ‘Buy’ rating and $115 price target. Ricky Sandler‘s Eminence Capital was one of the hedge funds that initiated a stake in Ralph Lauren Corp (NYSE:RL) during the first quarter, purchasing 607,234 shares of the company.

#2 Kate Spade & Co (NYSE:KATE)

 – Investors with long positions (as of March 31) : 32

 – Aggregate value of Investors’ holdings (as of March 31): $694.72 million

Kate Spade & Co (NYSE:KATE) was one of the best performing apparel stocks during the first quarter, registering gains of 43.6%. The number of hedge funds covered by us long Kate Spade & Co (NYSE:KATE) declined by four during that time, while the aggregate value of their holdings in it swelled by 50%. Though shares of Kate Spade have given up a large part of their first quarter gains following the company’s latest quarterly results on May 5, they are still trading up by 27% year-to-date. Some analysts believe that trading at a trailing P/E of 33.37, Kate Spade’s stock is overvalued, especially when one takes into account that the company’s revenue isn’t growing much and the headwinds it faces. On May 5, analysts at Stephens downgraded the stock to ‘Equal Weight’ from ‘Overweight’. Funds that boosted their stake in the company significantly during the first quarter included Daniel S. Och‘s OZ Management, which pumped up its holding up by 689% to 3.86 million shares.

#1 Michael Kors Holdings Ltd (NYSE:KORS)

 – Investors with long positions (as of March 31) : 36

 – Aggregate value of Investors’ holdings (as of March 31): $1.03 Billion

Led by the impressive quarterly results it reported in early-February, Michael Kors Holdings Ltd (NYSE:KORS) saw a marked increase in its popularity among hedge funds during the first quarter. The number of hedge funds in our system that held a stake in Michael Kors Holdings Ltd (NYSE:KORS) rose by 33.3%, while the aggregate value of their holdings in it jumped by 37% during the period. Shares of the luxury accessories and apparel manufacturer shed 24% of their value in May amid fears that the appeal of the brand is diminishing and that Nordstrom will stop stocking its products going forward due to low demand. Despite this heavy decline, Michael Kors’ stock is still up by 4% year-to-date. The 30 leading analysts and research firms on the Street who track the stock currently have an average rating of ‘Overweight’ and an average price target of $58.19 on it. One of the funds that used the 42% rise in Michael Kors’ stock during the first quarter to book some profits was David Einhorn‘s Greenlight Capital, which reduced its holding in the company by 25% to 6.75 million shares.

Disclosure: None