Founded in 1985, Buckingham Capital Management is a long/short hedge fund run by David Keidan. The fund employs two main investment strategies: a broader strategy that includes investing in stocks across a number of sectors, and a strategy that focuses exclusively on retail, apparel, and footwear stocks. The firm oversees approximately $1.3 billion in assets under management and its public equity portfolio was valued at $881 million at the end of the first quarter. Insider Monkey calculates a fund’s long stock picking skill by looking at the weighted average returns of its long positions in companies with a market cap of at least $1 billion, based on the size of those positions at the beginning of each quarter. Under these assumptions, Buckingham Capital’s 63 qualifying long stock picks registered a gain of 5.2% for the first quarter, ranking it in the upper tier of hedge funds. Since the fund’s portfolio has great exposure to apparel stocks, we’ll take a look at its top-5 positions in this sector and heading into the second quarter.
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Buckingham Back on the Foot Locker Bandwagon
Buckingham Capital’s stake in Foot Locker, Inc. (NYSE:FL) was upped by 17% during the first quarter, to 393,472 shares valued at $25.4 million. Foot Locker also received a boost of confidence from the hedge fund community as a whole, as 35 of the funds followed by Insider Monkey held a position in the company at the end of 2015, up from 25 registered a quarter earlier. Foot Locker, Inc. (NYSE:FL) has a market cap of $8.62 billion and pays an annual dividend of $1.02 per share, the equivalent of a 1.78% dividend yield. The stock is currently trading at a trailing Price-to-Earnings (P/E) ratio of 16.12, significantly lower than the industry average of 25.90, as reported by Yahoo! Finance. The company’s next earnings report is due on May 20 and market participants are looking for $1.39 in earnings per share and revenue of approximately $2.00 billion. Billionaire Ken Griffin is also bullish on Foot Locker, Inc. (NYSE:FL), with his fund Citadel Investment Group having reported a massive increase in its Foot Locker holding over the fourth quarter, to 2.75 million shares.
Is Hanesbrands Still a Buy?
Hanesbrands Inc. (NYSE:HBI) is another apparel stock that Mr. Keidan and his team are optimistic about. They boosted their investment in the company by 6% during the first quarter, to 938,521 shares worth approximately $26.6 million at the end of March. Hanesbrands Inc. (NYSE:HBI) recently posted first quarter results that topped analysts’ estimates. Revenue came in at $1.22 billion, in-line with the estimates, while adjusted earnings stood at $0.26 per share, above the consensus of $0.22 per share. Analysts at Credit Suisse recently reiterated their ‘Outperform’ rating for the stock and increased their price target on it to $39 per share from the previous target of $36 per share. 42 top hedge funds in our system reported a stake in Hanesbrands Inc. (NYSE:HBI) as of the end of December, up from 32 a quarter prior to that. Together those funds controlled approximately 12% of the company’s common stock. Among the funds followed by Insider Monkey, John Shapiro‘s Chieftain Capital held the largest stake in Hanesbrands at the end of 2015, amounting to 9.98 million shares, up by 9% from the end of September.
Turn the page to read about Buckingham Capital Management’s top three equity positions.
Buckingham Loads Up on Shares of PVH
Buckingham Capital’s PVH Corp (NYSE:PVH) holding received a major boost during the first quarter, with the fund having indicated ownership of 278,292 shares of the company, up by 125% quarter-over-quarter. Other hedge funds sought to distance themselves from the stock during the fourth quarter, as the number of funds in our database that reported a long position in the company as of the end of December dropped to 27, down from 37 at the end of September. At the end of March, PVH posted its fourth quarter financial results, which exceeded expectations. The company reported $2.11 billion in revenue alongside adjusted earnings of $1.52 per share, while analysts had estimated EPS of $1.45 on the back of $2.07 billion in revenue. So far this year, PVH Corp (NYSE:PVH) has been on a solid uptrend, having ended Monday’s trading session at $91.40 per share, up by over 25% for the year. Larry Robbins‘ Glenview Capital reported a 45% reduction to its holding of PVH Corp (NYSE:PVH) during the fourth quarter, to 2.44 million shares.
Buckingham’s Still Bullish on Signet Jewelers
According to its latest 13F filing, Buckingham Capital now holds 239,047 shares of Signet Jewelers Ltd. (NYSE:SIG), up by 11% quarter-over-quarter, and with the holding valued at $29.5 million at the end of March. The stock is trading at a trailing P/E ratio of 21.09, nearly twice the size of the forward P/E of 11.35. This is an indicator that market participants expect the company’s earnings to improve significantly withing the next 12 months. Signet Jewelers Ltd. (NYSE:SIG) is due to release its next financial report on May 26 and analysts are looking for $1.94 in earnings per share and revenue of $1.61 billion. At the end of December, roughly 34% of Signet Jewelers Ltd. (NYSE:SIG)’s stock was held by 53 elite hedge funds in our system, up from 47 reported as of the end of September. Robert Joseph Caruso‘s Select Equity Group is also betting big on this stock, which was its top holding at the end of December. According to its 13F filing for the December quarter, Select Equity’s stake amounts to 5.98 million shares.
Mr. Keidan’s New Top Dog
Mr. Keidan and his team decided to increase their investment in G-III Apparel Group, Ltd. (NASDAQ:GIII) during the first quarter, with Buckingham Capital having reported a 9% boost to its stake, to 606,345 shares valued at $29.7 million. The fourth quarter of fiscal year 2016 was a disappointing one for G-III Apparel Group, Ltd. (NASDAQ:GIII), as the company failed to meet Wall Street’s expectations. Revenue came in at $527.43 million, lower than analysts’ estimates of $568.61 million, while earnings stood at $0.17, well below expectations of $0.42 per share. The stock fell off a cliff after the report and so far has failed to recover, having traded in a narrow range for the past six weeks. As reported in its latest 13F filing, Clifford Fox’s Columbus Circle Investors held 1.29 million shares of G-III Apparel Group at the end of the fourth quarter, up by 15% from the end of the third quarter.