The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos, and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA).
Is Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) an exceptional investment now? The smart money is selling. The number of bullish hedge fund positions fell by 2 in recent months. At the end of this article we will also compare ULTA to other stocks including Marathon Oil Corporation (NYSE:MRO), Xerox Corporation (NYSE:XRX), and Textron Inc. (NYSE:TXT) to get a better sense of its popularity.
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To the average investor there are tons of formulas shareholders use to value publicly traded companies. Two of the most underrated formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best fund managers can outclass their index-focused peers by a solid amount (see the details here).
Keeping this in mind, we’re going to take a look at the fresh action surrounding Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA).
What have hedge funds been doing with Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exist a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Stephen Mandel’s Lone Pine Capital has the biggest position in Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), worth close to $535.2 million, comprising 2.2% of its total 13F portfolio. The second most bullish fund manager is Clifford Fox of Columbus Circle Investors, with a $255.5 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of John Griffin’s Blue Ridge Capital, Bain Capital’s Brookside Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Due to the fact that Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) has faced a declination in interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies that decided to sell off their full holdings heading into Q4. Intriguingly, Gabriel Plotkin’s Melvin Capital Management sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $46.3 million in stock. Charles Anderson’s fund, Fox Point Capital Management, also said goodbye to its stock, about $7.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) but similarly valued. We will take a look at Marathon Oil Corporation (NYSE:MRO), Xerox Corporation (NYSE:XRX), Textron Inc. (NYSE:TXT), and MGM Resorts International (NYSE:MGM). All of these stocks’ market caps are closest to ULTA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRO | 34 | 429246 | 1 |
| XRX | 33 | 547895 | 3 |
| TXT | 26 | 688242 | -7 |
| MGM | 49 | 1914535 | -9 |
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $895 million. That figure was $1878 million in ULTA’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Textron Inc. (NYSE:TXT) is the least popular one with only 26 bullish hedge fund positions. Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) 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 collectively most fond of. In this regard, MGM might be a better alternative.
