Tiffany: A Little Too Luxurious Now

Since my original post on Tiffany (TIF) in August 2006, shares have surged about 40 percent. Those gains may continue as activist Nelson Peltz of Trian Fund Management has bought a 5.5% stake, calling the company undervalued.

Peltz's goal will be to advocate for changes in global operations; particularly in Japan, where the company has a strong presence but results have been weak. He could also push for share buybacks created from increased cash flow from proposed cost cutting.

Peltz may create value which could drive up earnings but from a value investor standpoint the company is fundamentally not screaming cheap. In hindsight, the buying opportunity was last summer when the market was acting irrational to luxury retailers.

One of my biggest mistakes was not increasing my Coach (COH) position when shares fell into the mid $20 range. Currently they trade at $47.18.

TIF 1-yr chart: