This Hedge Fund Loves Abercrombie & Fitch Co. (ANF) and Tiffany & Co. (TIF), Should You?

TUDOR INVESTMENT CORPPaul Tudor Jones founded Tudor Investment in 1980 and has a net worth over $3 billion. His fund focuses on short term trading and charges a fee that is above industry standards, charging a 4% management fee and 23% performance fee, compared to the standard 2-and-20 structure. Tudor recently filed its 13F with the SEC, which reveals public equity holdings of the firm as of the end of the third quarter. We have analyzed Tudor’s 13F and picked out the fund’s five largest holdings. Check out all of the billionaire’s top picks, they may just surprise you.

Tudor’s top stock holding at the end of the third quarter was Abercrombie & Fitch Co. (NYSE:ANF), which was a 5000% increase in shares from 2Q. The specialty apparel retailer trades on the high end of the industry with a 35x P/E, compared to American Eagle, Gap and The Buckle all below 20x. We still find value in the stock, though, as it trades at a mere 18 times forward earnings, with a five-year expected EPS CAGR of 18%.

Abercrombie is currently in ‘scale-back’ mode as it looks to close underperforming stores in the U.S., which should help the company meet its 3% same store sales growth target for next year. Over the longer term, Abercrombie is leaning on its women’s branded outlets Gilly Hicks, with plans to open stores through the U.K. and Germany. Abercrombie is one of the small cap stocks that hedge funds love (see our entire list of small caps you may want to buy).

Tiffany & Co. (NYSE:TIF) was a new pick during 3Q that put the stock as the fund’s second largest 13F holding. Tiffany trades at 17x earnings, in line wither other top retailer Coach (17x), but below one of its higher profile competitor Blue Nile (70x). Paying a dividend that yields just over 2%, Tiffany appears to be a good value and trades at 15x forward earnings. As economic uncertainty undoubtedly continues, Tiffany’s is still expected to perform well, with sales growth expected to be 6% in 2013. A strong rebound abroad will especially help to carry the company in the interim, especially in Japan.

Cardinal Health, Inc. (NYSE:CAH) was also a new position for Tudor during 3Q. This healthcare servicing company trades at only 13x earnings, well below its peers. What’s even better is that Cardinal’s forward P/E is at 11x. Revenues are expected to be down 7% in 2013 due to the loss of the distribution contract with Express Scripts, but increased generic sales should help offset this given Cardinal is one of the three major drug distribution companies in the U.S.  Cardinal was a new pick for the infamous Jim Simons during 3Q (see Jim Simons’ top picks here).

C.R. Band, Inc. (NYSE:BCR) saw a 350% increase in shares owned by  for Tudor during 3Q, putting CR as Tudor’s 4th largest 13F holding. The medical supply company has seen weakness of late thanks to weak demand in U.S. and Europe. Despite a less than desirable macro outlook, many of CR’s products have market leading positions and should buoy the company in the interim. Trading in line with the industry at 18x earnings, but with a forward P/E of 14x, we believe that CR’s shares could be worth taking a closer look at.

Last but certainly not least, Tudor increased its Allergan, Inc. (NYSE:AGN) stake by over 100% in 3Q, making the healthcare company the fund’s fifth largest stock holding. The big-time biopharma player expects to see new growth from its diverse product pipeline despite weak sales in Europe. The sell-side’s expected 14% five-year annual EPS growth should be driven by a ‘white hot’ Botox product. At a 27x trailing P/E, Allergan is on the high end of the industry, but its forward P/E of 20x makes the stock an appealing value play.

We agree that Abercrombie should be Tudor’s top pick given its growth prospects and valuation, and are also intrigued by Tiffany given its ability to perform well in a down economy due to its insulated customer base. For Tudor’s other three holdings – the healthcare-related companies – Cardinal’s market leading position will help the company perform well, but would prefer the high-growth opportunities that CR and Allergan provide.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!