Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Ross Stores, Inc. (NASDAQ:ROST) has seen an increase in enthusiasm from smart money recently. Our calculations also showed that ROST isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are several metrics shareholders employ to assess stocks. Two of the most under-the-radar metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outperform their index-focused peers by a healthy margin (see the details here).
We’re going to check out the new hedge fund action encompassing Ross Stores, Inc. (NASDAQ:ROST).
Hedge fund activity in Ross Stores, Inc. (NASDAQ:ROST)
At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ROST over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Ross Stores, Inc. (NASDAQ:ROST), which was worth $243.1 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $140.6 million worth of shares. Moreover, Adage Capital Management, Alyeska Investment Group, and Scopus Asset Management were also bullish on Ross Stores, Inc. (NASDAQ:ROST), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Scopus Asset Management, managed by Alexander Mitchell, established the most valuable position in Ross Stores, Inc. (NASDAQ:ROST). Scopus Asset Management had $92.2 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $26.9 million investment in the stock during the quarter. The following funds were also among the new ROST investors: Matthew Hulsizer’s PEAK6 Capital Management, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks similar to Ross Stores, Inc. (NASDAQ:ROST). We will take a look at Ford Motor Company (NYSE:F), Electronic Arts Inc. (NASDAQ:EA), TransCanada Corporation (NYSE:TRP), and Air Products & Chemicals, Inc. (NYSE:APD). This group of stocks’ market caps are closest to ROST’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| F | 30 | 991693 | -2 |
| EA | 79 | 4497231 | 0 |
| TRP | 14 | 229372 | 2 |
| APD | 42 | 1328827 | 6 |
| Average | 41.25 | 1761781 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.25 hedge funds with bullish positions and the average amount invested in these stocks was $1.76 billion. That figure was $966 million in ROST’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand TransCanada Corporation (NYSE:TRP) is the least popular one with only 14 bullish hedge fund positions. Ross Stores, Inc. (NASDAQ:ROST) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
