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Is PVH Corp (PVH) Going To Burn These Hedge Funds?

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards PVH Corp (NYSE:PVH).

Is PVH Corp (NYSE:PVH) undervalued? Prominent investors are turning bullish. The number of long hedge fund positions increased by 1 recently. Our calculations also showed that PVH isn’t among the 30 most popular stocks among hedge funds (view the video below). PVH was in 32 hedge funds’ portfolios at the end of June. There were 31 hedge funds in our database with PVH positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Richard Pzena - Pzena Investment Management

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a peek at the latest hedge fund action regarding PVH Corp (NYSE:PVH).

Hedge fund activity in PVH Corp (NYSE:PVH)

At the end of the second quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PVH over the last 16 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

PVH_oct2019

Among these funds, Pzena Investment Management held the most valuable stake in PVH Corp (NYSE:PVH), which was worth $284.1 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $111.7 million worth of shares. Moreover, D E Shaw, Citadel Investment Group, and Balyasny Asset Management were also bullish on PVH Corp (NYSE:PVH), allocating a large percentage of their portfolios to this stock.

As one would reasonably expect, specific money managers have jumped into PVH Corp (NYSE:PVH) headfirst. Alyeska Investment Group, managed by Anand Parekh, created the biggest position in PVH Corp (NYSE:PVH). Alyeska Investment Group had $40.2 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also initiated a $32.6 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Robert Pohly’s Samlyn Capital, and Gregg Moskowitz’s Interval Partners.

Let’s now review hedge fund activity in other stocks similar to PVH Corp (NYSE:PVH). These stocks are Hill-Rom Holdings, Inc. (NYSE:HRC), The Toro Company (NYSE:TTC), Alteryx, Inc. (NYSE:AYX), and Gardner Denver Holdings, Inc. (NYSE:GDI). This group of stocks’ market values resemble PVH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HRC 27 627642 -2
TTC 24 620869 8
AYX 38 1209758 7
GDI 24 293865 1
Average 28.25 688034 3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $688 million. That figure was $1066 million in PVH’s case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand The Toro Company (NYSE:TTC) is the least popular one with only 24 bullish hedge fund positions. PVH Corp (NYSE:PVH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PVH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PVH were disappointed as the stock returned -6.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

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