Is Traditional Apparel Retailing A Buying Opportunity?

Given the recent negative performance of many apparel retailers and some calls that traditional apparel retailing is dead, we are addressing our thoughts on these issues and discussing which subsectors and companies we see as positioned best for long-term success. 

In our opinion, there has been a secular shift in apparel retailing that is a persistent force. 

We believe the current trend toward value over brand is here to stay. Unless a product can perform notably better than the competition (keep you warmer, keep you drier, perform better in athletic situations), consumers appear unwilling to pay a premium simply to own a brand. 

We also think that shifts in wallet share are here to stay, with experience (travel, restaurants) valued over apparel, and other costs--including healthcare, education, and housing--rising in share. 

Finally, we think the shift in distribution channel toward digital will persist. 

As a result, we agree that apparel retail growth is not likely to return to historical levels. Having acknowledged that, we do believe that we are at a low point in the apparel retail cycle and there is future upside.

We do not believe brick-and-mortar apparel retailing is dead; however, it will look much different in the future. We think there is a place for stores where consumers can touch fabrics, try sizes, and see fit. 

However, the apparel industry has experienced much self-inflicted near-term malaise. Many management teams have been overly optimistic regarding inventory levels and have not converted to more modern, responsive supply chains. 

This has resulted in a highly promotional retail environment that has forced even well-run companies to discount to remain competitive. Also, we think we are nearing the end of the athleisure fashion trend. 

With consumers having enough skinny and yoga pants to clothe themselves for a while and no new fashion must-haves, nothing is driving discretionary purchases.

Check out a summary of the big fishes in traditional retailing:

How George Soros Plays The Stock Market

The following article was written by our guest author Insider Monkey. Opinions of George Soros vary depending on whom you ask, but there’s no arguing against the Hungarian-American hedge fund manager’s investing pedigree. Earlier this month, Soros shared his thoughts on the Eurozone crisis at the Global Economic Symposium, and most of the usual headlines that surround the billionaire are focused on his macroeconomic views.

That’s all fine and dandy. We’d like to point out, though, that George Soros’ Soros Fund Management does maintain a $9 billion equity portfolio too. Due to the market-beating potential of hedge funds’ best stock picks (discover how we returned 47.6% in our first year), it’s useful to understand how a prominent investor like Soros is playing the stock market.

At the end of last quarter, George Soros and his management team disclosed a little over 200-equity holdings, with 15% of their capital allocated to their top five stock picks. This level of concentration is not uncommon for a large hedge fund, but a few of the specific names may surprise you.

Google

Other than Google [GOOG], that is. It’s really not very difficult to understand why the tech company is Soros’ No. 1 stock. Google was hedge funds’ favorite pick in the latest round of 13F filings, ahead of AIG [AIG] and Apple [AAPL]. Aside from offering a bevy of long-term product innovations like self-driving cars or smart thermostats, more immediate catalysts are the launch of the Moto X and next year’s release of Google Glass.

Both devices play into Wall Street’s bullish earnings estimates for Google, in which it expects 17% to 18% EPS growth in 2014 and 15% annual growth over the next half-decade. This trumps peers like Yahoo [s:YHOO] and even Apple. In addition to Soros’ bullishness, big-name fund managers Ray Dalio and Israel Englander have initiated Google positions in the last few months.

J.C. Penney

This is what we meant when we said you might be surprised. J.C. Penney [JCP] represents everything Google does not: poor market performance in 2013, high CEO turnover, an inconsistent business plan, and an uncertain future. The retailer is going back to its pre-Ron Johnson coupon strategy, which leads some to believe that it can recapture most of its old customers, and is thus undervalued at current levels.

It’s easier to be skeptical of this move than it is to support a bullish thesis, so we have a rare case where Soros is acting as a contrarian by betting on a stock rather than against it. Assuming you are for a turnaround here, J.C. Penney trades at a mere 0.15 times sales, but earnings will have to pick up. Longs can’t take many more monumental bottom line whiffs. Last quarter the retailer missed sell-side estimates by 88%, and in the first quarter of the year, EPS fell short of consensus by 36%. In fact, J.C. Penney has been in the red for a year and a half now.

A few days ago, Richard Perry cut almost half of his position in the retailer and last month, Bill Ackman liquidated his entire stake. What’s so notable about both of these moves is that Ackman’s hedge fund had the largest stake in J.C. Penney at the end of last quarter while Perry was third.

The remaining three

After the antithetical duo of Google and J.C. Penney, Soros’ next largest holdings are Herbalife [HLF], Charter Communications [CHTR] and Johnson & Johnson [JNJ].

While Ackman and Carl Icahn continue to feud about the legitimacy of Herbalife’s marketing practices, George Soros continues to book gains. Since we know that he held shares of the company on the last day of June, it can be inferred that Soros has made at least a 51% return on his long position. If he initiated the stake earlier in the second quarter, like in early May for example, this return stretches to more than 70%. Either way, the billionaire has to be happy that it represents one of his biggest holdings.

Charter Communications, meanwhile, is another stock that is up big (+72%) in 2013. The cable entertainment company has been a long-term pick for Soros, sitting in his clutches since early 2011. The same can be said for Johnson & Johnson, which has been in Soros’ equity portfolio for exactly four quarters. Johnson & Johnson is a prototypical dividend-payer that has actually offered double-digit capital gains this year, while Charter is a growth play plain and simple.

All in all, the variety presented in George Soros’ five largest stock picks is truly one of the best things about this group. Google, J.C. Penney and Herbalife are the three we’ll watch the closest going forward, particularly when new 13F filings come in mid-November.

Disclosure: none

George Soros Biggest Dividend Stock Buys And His Latest Portfolio

Georges Soros latest dividend stock moves and his asset allocation originally published at long-term-investments.blogspot.com. George Soros is a legendary and speculative driven hedge fund manager. He manages around $9.22 billion in his asset vehicle Soros Fund Management LLC. The money is invested in over 200 companies.

George Soros is a very active Trader. He bought 59 new companies, around 30 percent of his total assets. Half of his latest big stock purchases pay a dividend. The most important changes were made within the technology and cyclical consumer goods sector. 

He changed assets in this category with impact to his portfolio of around 8.7 percent or net 7.4 percent. Also important areas where he put money in were communication services and defensive consumer stocks. The 20 biggest stock purchases had an impact to his portfolio of around 14 percent.

George Soros is an unpredictable investor. He jumps on everything he believes to make money with. The positive thing is that he is a much diversified guy. 

None of his stock assets is too big to be over weighted. The biggest position has a 3.8 percent portfolio share. His 20 top stock positions represent only 31.5% of his portfolio value, including ETFs, the ratio rises to 47.7 percent.

Bill Ackman’s Highest Yielding Dividend Stock Bets And His Complete Portfolio

Bill Ackman’s latest portfolio transactions and his biggest positions originally published at "long-term-investments.blogspot.com". Some of you might know Bill Ackman because of the phone battle against Carl Icahn on CNBC. He is an activist with around USD 10 billion in assets under management. In his management company “Pershing Square Capital” he has only 10 stock holdings.

As an activist, Ackman tries to increase pressure on the management of a company in order to implement own visions of the company’s future. Nearly half of his positions have voting rights over 10 percent.

His main investment focus is on defensive stocks from the consumer and industrial sector. Around 70 percent of his exposure is related to these two sectors.

Below is a small list of Bill Ackman’s latest Portfolio transactions. He is a lazy guy. Last quarter, he bought only one stock and he needed more than a year to complete his latest 20 transactions.

From his 20 latest transactions are 12 unique positions of which 10 pay dividends. Dividend payments are not in focus of Ackman’s investment strategy. Only one company yields above the 3 percent mark.

Bill Ackman - Pershing Square Capital Management Q4/2011 Portfolio

Bill Ackman - Pershing Square Capital Management Q4/2011 Fund Investing Strategies By Dividend Yield – Stock Capital, Investment. Here is a current portfolio update of Bill Ackman’s - Pershing Square Capital Management - portfolio movements as of Q4/2011 (December 31, 2011). In total, he has 10 stocks with a total portfolio worth of USD 7,765,656,000. Bill made major changes within the recent quarter. He bought Beam (BEAM) and Fortune Brands (FBHS). Finally, he added Canadian Pacific Railway (CP). His biggest sale was Fortune Brands (FO).

Whitney R. Tilson - T2 Partners Q4/2011 Fund Portfolio

Whitney R. Tilson - T2 Partners Q4/2011 Fund Investing Strategies By Dividend Yield – Stock Capital, Investment. Here is a current portfolio update of Whitney R. Tilson’s - T2 Partners - portfolio movements as of Q4/2011 (December 31, 2011). In total, he held 45 stocks with a total portfolio worth of USD 169,519,000.

Michael Price - MFP Investors Q4/2011 Fund Portfolio

Michael F. Price - MFP Investors Q4/2011 Fund Investing Strategies By Dividend Yield – Stock Capital, Investment. Here is a current portfolio update of Michael F. Price’s - MFP Investors - portfolio movements as of Q4/2011 (December 31, 2011). In total, he held 102 stocks with a total portfolio worth of USD 614,302,000.