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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Capri Holdings Limited (NYSE:CPRI) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is CPRI stock a buy or sell? Capri Holdings Limited (NYSE:CPRI) has experienced an increase in enthusiasm from smart money lately. Capri Holdings Limited (NYSE:CPRI) was in 42 hedge funds' portfolios at the end of December. The all time high for this statistic is 47. There were 36 hedge funds in our database with CPRI positions at the end of the third quarter. Our calculations also showed that CPRI isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Ricky Sandler of Eminence Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a gander at the key hedge fund action regarding Capri Holdings Limited (NYSE:CPRI).
Do Hedge Funds Think CPRI Is A Good Stock To Buy Now?
At Q4's end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in CPRI over the last 22 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Capri Holdings Limited (NYSE:CPRI) was held by Rima Senvest Management, which reported holding $152.4 million worth of stock at the end of December. It was followed by HG Vora Capital Management with a $130.2 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and Eminence Capital. In terms of the portfolio weights assigned to each position HG Vora Capital Management allocated the biggest weight to Capri Holdings Limited (NYSE:CPRI), around 10.09% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, dishing out 5.95 percent of its 13F equity portfolio to CPRI.
Consequently, key hedge funds were breaking ground themselves. HG Vora Capital Management, managed by Parag Vora, established the biggest position in Capri Holdings Limited (NYSE:CPRI). HG Vora Capital Management had $130.2 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin's Senator Investment Group also initiated a $32.6 million position during the quarter. The other funds with new positions in the stock are Jeff Osher's No Street Capital, Alexander Mitchell's Scopus Asset Management, and Brad Stephens's Six Columns Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Capri Holdings Limited (NYSE:CPRI) but similarly valued. These stocks are CDK Global Inc (NASDAQ:CDK), Reynolds Consumer Products Inc. (NASDAQ:REYN), CACI International Inc (NYSE:CACI), Cyberark Software Ltd (NASDAQ:CYBR), Jefferies Financial Group Inc. (NYSE:JEF), Blueprint Medicines Corporation (NASDAQ:BPMC), and Grupo Aeroportuario del Pacifico (NYSE:PAC). This group of stocks' market caps resemble CPRI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDK,27,392132,-1 REYN,18,228024,0 CACI,28,512915,-3 CYBR,27,455087,2 JEF,33,700199,0 BPMC,38,1246182,4 PAC,4,120455,-2 Average,25,522142,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $522 million. That figure was $921 million in CPRI's case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (NYSE:PAC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Capri Holdings Limited (NYSE:CPRI) is more popular among hedge funds. Our overall hedge fund sentiment score for CPRI is 86.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on CPRI as the stock returned 31.4% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.