The apparel industry is worth roughly $1.2 trillion as of 2016. U.S. consumers spend a whopping $250 billion annually on apparel, which makes the industry an attractive sector for investment. However, recent earnings reports from the industry’s top players suggest that the segment is facing headwinds amid a slowdown in demand from U.S. and Chinese consumers.
In this article, we’ll look at the favorite apparel stocks of the hedge funds tracked by Insider Monkey and see how they’ve been trading those stocks in recent months.
Through extensive research, we have determined that the due diligence that these investors employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also showed that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).
Under Armour Inc (NYSE:UA)
– Number of Hedge Funds With Long Positions (as of June 30): 31
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $573.87 million
A total of 31 hedge funds in our system owned stakes in Under Armour Inc (NYSE:UA) at the end of the second quarter, a big jump from 21 funds a quarter earlier. Last week, the Washington D.C-based sports clothing company said that its CEO Kevin A. Plank had entered into a pre-arranged stock trading plan to sell shares of the company over a period of nine months beginning this October, which could amount to up to 2.075 million shares being sold. Financial services firm Argus recently downgraded Under Armour, Inc. (NYSE: UA) to ‘Hold’ from ‘Buy’. The stock is down by over 6% so far this year.
Ralph Lauren Corp (NYSE:RL)
– Number of Hedge Funds With Long Positions (as of June 30): 32
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $738.5 million
749 hedge funds that we track filed 13F’s for the June quarter, 32 of which were long Ralph Lauren Corp (NYSE:RL) on June 30, owning about 9.90% of the company’s float in aggregate. The New York-based clothing and fashion company reported fiscal year 2017 first quarter EPS of $1.06 on $1.55 billion in revenue, crushing analysts’ estimates of $0.89 in EPS and $1.53 billion in revenue. Shares of Ralph Lauren are down by 7.93% so far this year. On August 31, the company declared a quarterly dividend of $0.50 per share, which equates to an annual dividend yield of 1.96%. Mason Hawkins’ Southeastern Asset Management owns 2.74 million shares of Ralph Lauren Corp (NYSE:RL) as of the end of June.
On the next page, we’ll uncover hedge funds’ three favorite apparel stocks.