In this article, we discuss the top 5 stock picks of Yale University. If you want to read our detailed analysis of these stocks, go directly to Yale University Stock Portfolio: Top 10 Picks.
5. Stitch Fix, Inc. (NASDAQ:SFIX)
Number of Hedge Fund Holders: 35
On September 21, Stitch Fix, Inc. (NASDAQ:SFIX) posted earnings for the fourth fiscal quarter, reporting earnings per share of $0.19, beating estimates by $0.31. The revenue over the period was $570 million, up 28% year-on-year and beating predictions by $23 million. The share price soared by over 14% following the announcement of the results. The company has benefited from the change in shopping trends and the shift towards digital in the past year and a half.
According to the latest filings, Yale University owned over 55,000 shares in Stitch Fix, Inc. (NASDAQ:SFIX) at the end of June 2021 worth $3.36 million, representing 1.20% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Stitch Fix, Inc. (NASDAQ:SFIX) with 2.6 million shares worth more than $160 million.
“We purchased a new position–Stitch Fix–which is attacking this problem of abundance and the friction of shopping digitally head on with curation and personalization.
Your Own Personal Clothing Store
Stitch Fix is incredibly interesting. Founded by Katrina Lake in 2011, Stitch Fix turned apparel shopping into a delightfully personalized, subscription-based platform. The company collects numerous data points when onboarding a customer from the generics and quirks of each individual’s size and shape to tastes in designers, colors and styles. This empowers the company’s stylists to curate a “fix” with five clothing items on a periodic cadence (monthly, quarterly, semi-annually, etc.) of the customer’s choosing. A box arrives with its contents formerly unseen by the customer, with the constant being each item is already a known fit based on the size and shape of the customer’s body type and the trove of data Stitch Fix has on other “look alikes” across their customer base. Of the 5 items, a customer can keep all or none, but they must pay $20 irrespective of whether they keep anything. After reviewing the items, a customer can keep all items (for which they would get a 25% keep five discount) or return some items and checkout online to pay full price.
We owe immense gratitude to Mario Cibelli for helping us think through this company the right way (Mario covered the company in depth with Elliot on a recent episode of This Week In Intelligent Investing).
It is a company we first analyzed and found interesting heading into IPO, deploying the same customer lifetime value framework that led us into our Roku position early. Stitch Fix was intriguing and challenging through this lens, because churn is high in the measurable data, making the CLTV of each individual customer very sensitive to small changes in churn. Mario insisted the more appropriate way to think about this company is comparing them to a retailer like Nordstrom. People start their journey with Stitch Fix, buy a bunch of clothes over several months and then shut off the subscription once a satisfactory portion of their wardrobe has been replenished. Customers reengage once another round of refreshment is needed, but while some churn is the bad kind, not all fits that mold…” (Click here to see the full text)