According to a 13G filed with the SEC, SAC Capital Advisors, which is managed by billionaire Steve Cohen, owns a little over 2 million shares of Skechers USA Inc (NYSE:SKX). This gives the fund 5.1% of the total shares outstanding of the $1.1 billion market cap footwear company. We track quarterly 13F filings from hedge funds such as SAC as part of our work researching investment strategies (we have found, for example, that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year) and so we can see that at the beginning of January Cohen and his team only had about 550,000 shares in their portfolio (see more of Cohen’s stock picks).
Skechers USA Inc (NYSE:SKX)’ revenue was down 3% last year from its levels in 2011, and is now 22% below its peak from 2010. Cost of goods sold declined, and growth in operating expenses was held down; as a result, the company reported a small profit for 2012 as opposed to large net losses in the previous year, though once again the financials pale in comparison to the 2010 numbers. However, Skechers did experience something of a recovery in the fourth quarter of 2012: revenue increased significantly compared to Q4 2011, and adjusted earnings per share of 8 cents crushed analyst expectations of a loss of 11 cents per share.
Wall Street analysts expect continued improvements in 2013, with consensus forecasts calling for $1.03 in EPS for the year- a current-year P/E multiple of 21. Sell-side projections then imply a forward earnings multiple of 15. From that point Skechers USA Inc (NYSE:SKX) would not need to grow its earnings by much in order to prove a good value, but of course the company would have to meet those targets.
Our database of 13F filings shows that hedge funds weren’t particularly excited about Skechers USA Inc (NYSE:SKX) in the fourth quarter of 2012. The only fund with a position worth over $20 million at the end of December was David Keidan’s Buckingham Capital Management (find Buckingham’s favorite stocks). We also keep track of insider trading filings and can see that a company officer bought 10,000 shares in early March at an average price of $21.19 per share; studies show that stocks bought by insiders narrowly outperform the market on average (read our analysis of studies on insider trading).