Overall, it has been a rough year for Michael Kors Holdings Ltd (NYSE:KORS) with its shares declining by 47.98% year-to-date. Smart money held a bearish outlook for the company at the end of the first quarter with 40 hedge funds holding $1.90 billion worth of stock. At the end of the fourth quarter of 2014, 46 investors from our database had positions worth $1.94 billion in aggregate. Stephen Mandel’s Lone Pine Capital was the largest shareholder of Michael Kors, among the funds we track, with a stake worth $738.05 million containing 11.23 million shares. Rob Citrone’s Discovery Capital Management and Bain Capital’s Brookside Capital are among other major stakeholders of the company. In terms of insider activity, there have not been any transactions year-to-date indicating a stable insider sentiment.
We would recommend investors to be watchful of the stock and wait for its earnings results before initiating new positions in the company.
Why are we interested in the hedge fund sentiment surrounding a company? We use 13F filings to determine the top 15 small-cap stocks held by a number of elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 123% over the last three years, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).