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PVH Corp (PVH) Fell Out Of Favor With Hedge Funds

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  • PVH

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. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards PVH Corp (NYSE:PVH).

PVH Corp (NYSE:PVH) shareholders have witnessed a decrease in support from the world's most elite money managers of late. PVH Corp (NYSE:PVH) was in 28 hedge funds' portfolios at the end of June. The all time high for this statistic is 44. Our calculations also showed that PVH isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Pzena - Pzena Investment Management
Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind we're going to take a peek at the key hedge fund action surrounding PVH Corp (NYSE:PVH).

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

At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in PVH a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is PVH A Good Stock To Buy?
Is PVH A Good Stock To Buy?

More specifically, Pzena Investment Management was the largest shareholder of PVH Corp (NYSE:PVH), with a stake worth $835.8 million reported as of the end of June. Trailing Pzena Investment Management was Lone Pine Capital, which amassed a stake valued at $292.6 million. Scopus Asset Management, Melvin Capital Management, and Viking Global were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Stormborn Capital Management allocated the biggest weight to PVH Corp (NYSE:PVH), around 4.17% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, designating 3.25 percent of its 13F equity portfolio to PVH.

Due to the fact that PVH Corp (NYSE:PVH) has experienced a decline in interest from the smart money, it's safe to say that there exists a select few hedgies who sold off their entire stakes heading into Q3. At the top of the heap, Louis Bacon's Moore Global Investments dumped the biggest position of the "upper crust" of funds tracked by Insider Monkey, totaling close to $8.6 million in stock, and Dan Rasmussen's Verdad Advisers was right behind this move, as the fund said goodbye to about $8.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds heading into Q3.

Let's now take a look at hedge fund activity in other stocks similar to PVH Corp (NYSE:PVH). These stocks are Lattice Semiconductor Corporation (NASDAQ:LSCC), LG Display Co Ltd. (NYSE:LPL), Churchill Downs Incorporated (NASDAQ:CHDN), Rexford Industrial Realty Inc (NYSE:REXR), AutoNation, Inc. (NYSE:AN), Cameco Corporation (NYSE:CCJ), and Acceleron Pharma Inc (NASDAQ:XLRN). This group of stocks' market valuations are similar to PVH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSCC,24,306527,0 LPL,7,27354,-2 CHDN,35,694267,16 REXR,21,128403,8 AN,24,610690,0 CCJ,25,587207,-5 XLRN,43,1579257,12 Average,25.6,561958,4.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $1760 million in PVH's case. Acceleron Pharma Inc (NASDAQ:XLRN) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 7 bullish hedge fund positions. PVH Corp (NYSE:PVH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PVH is 47.3. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on PVH as the stock returned 2.2% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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