Netflix (NFLX), Michael Kors (KORS), Yelp (YELP): Apex Capital’s Top Q2 Stock Picks

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Sanford (Sandy) Colen’s Apex Capital LLC has filed its most recent 13F with the SEC, disclosing its equity portfolio as of the period of report, March 31, 2015. The Orinda, California-based fund’s portfolio consisted of 35 long positions, with the total value of the portfolio standing at just under $1.43 billion. While the fund’s top three positions are the same from the previous reporting period, with its Netflix, Inc. (NASDAQ:NFLX) holding still leading the way, a newly-opened position in a small-cap company did crack the top five.

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That new small-cap pick is notable to us given the fact that we run a successful small-cap strategy that is based on the best small-cap picks of top investors like Colen. These money managers are heavily invested in the success of their small-cap picks and have poured considerable resources into identifying undervalued or under-the-radar companies to invest in. Our research has shown that they have much greater success with those small-cap picks than they do with their large-cap picks, because of the edge they have over the average investor when it comes to analyzing these lesser-known companies, an edge which is mostly lost on large-cap stocks. We have found that collectively, hedge funds’ top 15 small-cap picks provide a great investment opportunity, with our strategy having returned over 137% since it was launched at the end of August 2012 (see the details), beating the market by more than 140% during that time.

Netflix, Inc. (NASDAQ:NFLX) remains Apex’s top long position for the fourth straight quarter, and despite its big gains of 21.98% during Q1, Apex added slightly to the position, showing continued optimism for  its long-term performance. Apex’s position was upped by 3% to 233,450 shares, with a value of $97.28 million as of the end of March. Short-term at least, the continued optimism has proven very wise, as Netflix, Inc. (NASDAQ:NFLX) has bounded up by another 33.55% in April.

While its latest earnings announced in April missed estimates, the video streaming subscription service continued to corral big subscriber numbers, shattering the estimates as it cruised past the 60 million subscriber number for the first time. Still, there are concerns that the burgeoning costs associated with Netflix, Inc. (NASDAQ:NFLX)’s procurement and production of new content will seriously hamper earnings without continued major growth in subscriber numbers. Regardless,Netflix has some serious investing power in its corner, including the likes of Carl Icahn and Stephen Mandel.

Luxury brand Michael Kors Holdings Ltd (NYSE:KORS) remains in second spot in Apex’s portfolio for the second straight quarter. Unlike Netflix, Michael Kors had a disappointing quarter, its stock shedding 12.45%. Apex also increased its position in Michael Kors Holdings Ltd (NYSE:KORS) during the quarter, by 12% to just under 1.01 million shares, which had a value of $66.25 million. Also unlike Netflix, Michael Kors has continued its swoon into Q2, sliding another 6% in April. The dips may provide the perfect opportunity for investors to open a position or build their existing ones, as analysts are quite bullish on the stock. The average price target among 17 analysts is over $82, an upside of over 30%, and the stock trades at a forward P/E ratio of just 13.05. Mandel is also heavily invested in Michael Kors Holdings Ltd (NYSE:KORS), along with fellow billionaire investors Rob Citrone, Ken Griffin, and Israel Englander.

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