Here is What Hedge Funds Think About Michael Kors Holdings Ltd (KORS)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Michael Kors Holdings Ltd (NYSE:KORS) to find out whether it was one of their high conviction long-term ideas.

Michael Kors Holdings Ltd (NYSE:KORS) was in 30 hedge funds’ portfolios at the end of September. KORS investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. There were 39 hedge funds in our database with KORS holdings at the end of the previous quarter. At the end of this article we will also compare KORS to other stocks including Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ), Towers Watson & Co (NYSE:TW), and JetBlue Airways Corporation (NASDAQ:JBLU) to get a better sense of its popularity.

According to most traders, hedge funds are seen as unimportant, old investment vehicles of the past. While there are greater than 8000 funds trading today, Our experts hone in on the bigwigs of this club, about 700 funds. These hedge fund managers watch over the lion’s share of the hedge fund industry’s total asset base, and by observing their inimitable investments, Insider Monkey has found a few investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s analyze the latest action surrounding Michael Kors Holdings Ltd (NYSE:KORS).

What have hedge funds been doing with Michael Kors Holdings Ltd (NYSE:KORS)?

Heading into Q4, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 23% from the second quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Einhorn’s Greenlight Capital has the largest position in Michael Kors Holdings Ltd (NYSE:KORS), worth close to $297.5 million, accounting for 4.9% of its total 13F portfolio. The second largest stake is held by Ricky Sandler of Eminence Capital, with a $176.4 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.

Since Michael Kors Holdings Ltd (NYSE:KORS) has faced bearish sentiment from hedge fund managers, logic holds that there was a specific group of hedge funds who sold off their full holdings heading into Q4. Interestingly, Brian Jackelow’s SAB Capital Management dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising roughly $48 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dropped about $41.5 million worth of KORS shares. These transactions are interesting, as aggregate hedge fund interest dropped by 9 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Michael Kors Holdings Ltd (NYSE:KORS). These stocks are Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ), Towers Watson & Co (NYSE:TW), JetBlue Airways Corporation (NASDAQ:JBLU), and SCANA Corporation (NYSE:SCG). This group of stocks’ market values are similar to KORS’s market value.

As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $624 million. That figure was $973 million in KORS’s case. Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) is the most popular stock in this table. On the other hand SCANA Corporation (NYSE:SCG) is the least popular one with only 12 bullish hedge fund positions. Michael Kors Holdings Ltd (NYSE:KORS) 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 JAZZ might be a better candidate to consider a long position.