Should you stand pat with Coach, Inc. (NYSE:COH)? Hedge funds are.
If you were to ask many of your peers, hedge funds are seen as useless, outdated investment tools of an era lost to time. Although there are more than 8,000 hedge funds in operation currently, Insider Monkey focuses on the crème de la crème of this group, about 525 funds. Analysts calculate that this group has its hands on the lion’s share of the smart money’s total assets, and by monitoring their highest performing investments, we’ve determined a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as necessary, bullish insider trading activity is a second way to look at the marketplace. Just as you’d expect, there are lots of reasons for a bullish insider to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).
Thus, let’s discuss the recent info surrounding Coach, Inc. (NYSE:COH).
What does the smart money think about Coach, Inc. (NYSE:COH)?
At the end of the second quarter, a total of 37 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably.
As Coach, Inc. (NYSE:COH) has faced bearish sentiment from upper-tier hedge fund managers, logic holds that there is a sect of fund managers who sold off their entire stakes heading into Q2. At the top of the heap, Curtis Macnguyen’s Ivory Capital (Investment Mgmt) said goodbye to the largest investment of the “upper crust” of funds we track, totaling close to $15.9 million in stock. D. E. Shaw’s fund, D E Shaw, also dumped its stock, about $13 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Coach, Inc. (NYSE:COH)?
Insider buying made by high-level executives is most useful when the company in question has seen transactions within the past half-year. Over the last six-month time frame, Coach, Inc. (NYSE:COH) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Coach, Inc. (NYSE:COH). These stocks are Iconix Brand Group Inc (NASDAQ:ICON), Steven Madden, Ltd. (NASDAQ:SHOO), Deckers Outdoor Corp (NASDAQ:DECK), Wolverine World Wide, Inc. (NYSE:WWW), and NIKE, Inc. (NYSE:NKE). This group of stocks are the members of the textile – apparel footwear & accessories industry and their market caps match COH’s market cap.