The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Ulta Beauty, Inc. (NASDAQ:ULTA) based on those filings.
Is Ulta Beauty, Inc. (NASDAQ:ULTA) a buy, sell, or hold? The best stock pickers are turning bullish. The number of bullish hedge fund bets increased by 1 lately. Our calculations also showed that ULTA isn’t among the 30 most popular stocks among hedge funds. ULTA was in 43 hedge funds’ portfolios at the end of March. There were 42 hedge funds in our database with ULTA positions at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to check out the key hedge fund action surrounding Ulta Beauty, Inc. (NASDAQ:ULTA).
How are hedge funds trading Ulta Beauty, Inc. (NASDAQ:ULTA)?
Heading into the second quarter of 2019, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in ULTA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ulta Beauty, Inc. (NASDAQ:ULTA) was held by Two Sigma Advisors, which reported holding $251 million worth of stock at the end of March. It was followed by Arrowstreet Capital with a $90.3 million position. Other investors bullish on the company included Citadel Investment Group, Columbus Circle Investors, and Two Creeks Capital Management.
Now, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the largest position in Ulta Beauty, Inc. (NASDAQ:ULTA). Arrowstreet Capital had $90.3 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also made a $36.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and Matthew Tewksbury’s Stevens Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ulta Beauty, Inc. (NASDAQ:ULTA) but similarly valued. We will take a look at Stanley Black & Decker, Inc. (NYSE:SWK), ArcelorMittal (NYSE:MT), The Clorox Company (NYSE:CLX), and Aptiv PLC (NYSE:APTV). All of these stocks’ market caps match ULTA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWK | 31 | 1033655 | -4 |
| MT | 12 | 222442 | -1 |
| CLX | 29 | 1070055 | 1 |
| APTV | 33 | 791655 | -11 |
| Average | 26.25 | 779452 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $779 million. That figure was $994 million in ULTA’s case. Aptiv PLC (NYSE:APTV) is the most popular stock in this table. On the other hand ArcelorMittal (NYSE:MT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Ulta Beauty, Inc. (NASDAQ:ULTA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately ULTA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ULTA were disappointed as the stock returned -5.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
