The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Ross Stores, Inc. (NASDAQ:ROST) and find out how it is affected by hedge funds’ moves.
Is Ross Stores, Inc. (NASDAQ:ROST) ready to rally soon? The smart money is turning bullish. The number of bullish hedge fund positions went up by 5 lately. At the end of this article, we will also compare Ross Stores, Inc. (NASDAQ:ROST) to other stocks, including CRH PLC (ADR) (NYSE:CRH), Charter Communications, Inc. (NASDAQ:CHTR), and Sun Life Financial Inc. (USA) (NYSE:SLF) to get a better sense of its popularity.
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In the financial world, there are tons of tools stock traders use to value stocks. Some of the most innovative tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform their index-focused peers by a solid margin (see the details here).
Keeping this in mind, let’s view the latest action surrounding Ross Stores, Inc. (NASDAQ:ROST).
Hedge fund activity in Ross Stores, Inc. (NASDAQ:ROST)
At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 14% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, East Side Capital (RR Partners), managed by Steven Richman, holds the biggest position in Ross Stores, Inc. (NASDAQ:ROST). East Side Capital (RR Partners) has a $214.4 million position in the stock, comprising 9.2% of its 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $160.7 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism comprise Dmitry Balyasny’s Balyasny Asset Management, David Harding’s Winton Capital Management, and Alexander Mitchell’s Scopus Asset Management.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, initiated the most valuable position in Ross Stores, Inc. (NASDAQ:ROST). Scopus Asset Management had $58.5 million invested in the company at the end of the quarter. Rob Citrone’s Discovery Capital Management also initiated a $31.8 million position during the quarter. The other funds with brand new Ross Stores, Inc. (NASDAQ:ROST) positions are Neil Chriss’ Hutchin Hill Capital, Eric Bannasch’s Cadian Capital, and Scopus Asset Management.
Let’s check out hedge fund activity in other stocks similar to Ross Stores, Inc. (NASDAQ:ROST). We will take a look at CRH PLC (ADR) (NYSE:CRH), Charter Communications, Inc. (NASDAQ:CHTR), Sun Life Financial Inc. (USA) (NYSE:SLF), and Moody’s Corporation (NYSE:MCO). All of these stocks’ market caps are closest to Ross Stores, Inc. (NASDAQ:ROST)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRH | 7 | 12060 | 4 |
| CHTR | 87 | 11260104 | -9 |
| SLF | 10 | 76510 | -3 |
| MCO | 31 | 3453664 | 3 |
As you can see, these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $3.70 billion. That figure was $909 million in Ross Stores, Inc. (NASDAQ:ROST)’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand, CRH PLC (ADR) (NYSE:CRH) is the least popular one with only 7 bullish hedge fund positions. Ross Stores, Inc. (NASDAQ:ROST) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Charter Communications, Inc. (NASDAQ:CHTR) might be a better candidate to consider a long position.
