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Hedge Funds Aren’t Done Buying Tapestry, Inc. (TPR)

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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Tapestry, Inc. (NYSE:TPR).

Tapestry, Inc. (NYSE:TPR) investors should be aware of an increase in activity from the world's largest hedge funds recently. Tapestry, Inc. (NYSE:TPR) was in 50 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TPR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are plenty of metrics stock traders use to size up their holdings. A duo of the less utilized metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can beat the broader indices by a healthy amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Robert Atchinson of Adage Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. Keeping this in mind we're going to view the latest hedge fund action surrounding Tapestry, Inc. (NYSE:TPR).

Do Hedge Funds Think TPR Is A Good Stock To Buy Now?

At first quarter's end, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the fourth quarter of 2020. By comparison, 37 hedge funds held shares or bullish call options in TPR a year ago. With hedgies' capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

The largest stake in Tapestry, Inc. (NYSE:TPR) was held by Suvretta Capital Management, which reported holding $222.3 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $121.1 million position. Other investors bullish on the company included Holocene Advisors, Melvin Capital Management, and Atreides Management. In terms of the portfolio weights assigned to each position Portland Hill Asset Management allocated the biggest weight to Tapestry, Inc. (NYSE:TPR), around 4.53% of its 13F portfolio. Six Columns Capital is also relatively very bullish on the stock, setting aside 4.03 percent of its 13F equity portfolio to TPR.

Consequently, key money managers were leading the bulls' herd. Melvin Capital Management, managed by Gabriel Plotkin, created the largest position in Tapestry, Inc. (NYSE:TPR). Melvin Capital Management had $86.5 million invested in the company at the end of the quarter. Gavin Baker's Atreides Management also initiated a $82.4 million position during the quarter. The other funds with new positions in the stock are Ben Jacobs's Anomaly Capital Management, Phill Gross and Robert Atchinson's Adage Capital Management, and Ray Dalio's Bridgewater Associates.

Let's check out hedge fund activity in other stocks similar to Tapestry, Inc. (NYSE:TPR). We will take a look at Weibo Corp (NASDAQ:WB), GFL Environmental Inc. (NYSE:GFL), The Interpublic Group of Companies Inc (NYSE:IPG), Avalara, Inc. (NYSE:AVLR), Allegion plc (NYSE:ALLE), Newell Brands Inc. (NASDAQ:NWL), and LPL Financial Holdings Inc (NASDAQ:LPLA). This group of stocks' market values are similar to TPR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WB,12,118275,-1 GFL,22,561202,4 IPG,29,709187,-9 AVLR,41,994280,-15 ALLE,27,969085,0 NWL,24,1952399,1 LPLA,38,1496713,-5 Average,27.6,971592,-3.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $972 million. That figure was $1166 million in TPR's case. Avalara, Inc. (NYSE:AVLR) is the most popular stock in this table. On the other hand Weibo Corp (NASDAQ:WB) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Tapestry, Inc. (NYSE:TPR) is more popular among hedge funds. Our overall hedge fund sentiment score for TPR is 86. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately TPR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TPR were disappointed as the stock returned -0.1% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.