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Tiffany & Co. (TIF), Fossil Inc (FOSL), Signet Jewelers Ltd. (SIG): Having Breakfast?

In the year 2012, Fossil Inc (NASDAQ:FOSL)’s net sales increased 11.3% to $2.86 billion, thanks to the acquisition of Skagen branded products, which contributed $93.8 million to 2012 sales. One tailwind for the stock is management’s positive guidance for 2013. Fossil expects sales to increase approximately 10% in the first quarter of 2013.

The hedge fund trade

Going into 2013, there were a total of 27 hedge funds long Tiffany & Co. (NYSE:TIF), which was an 8% increase from the third quarter. The top hedge fund manager was billionaire Nelson Peltz’s Train Partners, having a $58 million position that made up 2.4% of its 13F portfolio (check out Peltz’s top picks).

Major competitor Signet had 25 hedge funds long the stock at the end of 2012, which is the same number from the end of the third quarter. Its top hedge fund owners include a few lesser-known names, including Select Equity Group with the largest position in the stock, and Egerton Capital with the second largest position (read more about hedge funds loving Signet).

Compared to Tiffany’s 27 hedge fund owners, Fossil only had 17 going into 2013; however, Fossil’s top hedge fund owner is billionaire Steve Cohen of SAC Capital, with a $147 million position in the stock (see Cohen’s top consumer picks).

Tiffany tailwinds

Tiffany has a long-term objective of generating returns on assets of at least 10% and return on equity of at least 15%. The company is hitting these nicely of late, with a current ROA of 9.5% and ROE of 17%.
Tiffany also expects total net sales growth of 6%-8% for fiscal 2013. This should be driven by total net sales increases in the high-single-digit in all regions, from mid-teens growth in Asia Pacific to a low-single-digit jump in Japan.
Tiffany has embarked on the new initiative to open smaller stores to offer lower priced higher-margin products, in an effort to boosts store productivity. This should help further boost the already robust sales per square foot.
Don’t be fooled

Even if the long debated buyout never comes to fruition, Tiffany & Co. (NYSE:TIF) still appears to be an impressive long-term growth stock. On the back of a rebounding economy and international expansion opportunities, the specialty retailer should perform nicely.

The article Who’s Going to Have Tiffany’s for Breakfast? originally appeared on and is written by Marshall Hargrave.

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