At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Capri Holdings Limited (NYSE:CPRI) makes for a good investment right now.
Is Capri Holdings Limited (NYSE:CPRI) a good investment today? The smart money was taking an optimistic view. The number of long hedge fund bets improved by 5 recently. Capri Holdings Limited (NYSE:CPRI) was in 47 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 47. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CPRI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s check out the recent hedge fund action encompassing Capri Holdings Limited (NYSE:CPRI).
Do Hedge Funds Think CPRI Is A Good Stock To Buy Now?
At first quarter’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in CPRI a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Capri Holdings Limited (NYSE:CPRI) was held by Rima Senvest Management, which reported holding $193.3 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $120.6 million position. Other investors bullish on the company included Point72 Asset Management, Scopus Asset Management, and Samlyn Capital. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Capri Holdings Limited (NYSE:CPRI), around 6.09% of its 13F portfolio. Masterton Capital Management is also relatively very bullish on the stock, earmarking 5.58 percent of its 13F equity portfolio to CPRI.
As one would reasonably expect, specific money managers have been driving this bullishness. Junto Capital Management, managed by James Parsons, established the largest position in Capri Holdings Limited (NYSE:CPRI). Junto Capital Management had $30.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $16.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Kamyar Khajavi’s MIK Capital, D. E. Shaw’s D E Shaw, and David Einhorn’s Greenlight Capital.
Let’s now review hedge fund activity in other stocks similar to Capri Holdings Limited (NYSE:CPRI). These stocks are AutoNation, Inc. (NYSE:AN), Western Midstream Partners, LP (NYSE:WES), Kilroy Realty Corp (NYSE:KRC), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), People’s United Financial, Inc. (NASDAQ:PBCT), Woodward Inc (NASDAQ:WWD), and Smartsheet Inc. (NYSE:SMAR). This group of stocks’ market values resemble CPRI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AN | 24 | 585168 | 1 |
| WES | 8 | 127464 | -2 |
| KRC | 27 | 328922 | 2 |
| RARE | 25 | 588066 | -1 |
| PBCT | 20 | 208579 | -9 |
| WWD | 27 | 643051 | 8 |
| SMAR | 39 | 1490070 | -6 |
| Average | 24.3 | 567331 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $567 million. That figure was $909 million in CPRI’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Capri Holdings Limited (NYSE:CPRI) is more popular among hedge funds. Our overall hedge fund sentiment score for CPRI is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately CPRI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CPRI were disappointed as the stock returned 2.5% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Capri Holdings Ltd (NYSE:CPRI)
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Disclosure: None. This article was originally published at Insider Monkey.
