Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Costco Wholesale Corporation (NASDAQ:COST) from the perspective of those elite funds.
Is Costco Wholesale Corporation (NASDAQ:COST) the right pick for your portfolio? Prominent investors are getting less bullish. The number of bullish hedge fund bets fell by 6 recently. At the end of this article, we will also compare Costco Wholesale Corporation (NASDAQ:COST) to other stocks, including Priceline.com Inc (NASDAQ:PCLN), Barclays PLC (ADR) (NYSE:BCS), and Rio Tinto plc (ADR) (NYSE:RIO) to get a better sense of its popularity.
Follow Costco Wholesale Corp W (NASDAQ:COST)
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At the moment, there are a large number of methods stock market investors employ to grade their holdings. A pair of the most under-the-radar methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can beat the market by a superb margin (see the details here).
With all of this in mind, we’re going to view the new action regarding Costco Wholesale Corporation (NASDAQ:COST).
What have hedge funds been doing with Costco Wholesale Corporation (NASDAQ:COST)?
At the end of September, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 14% from the previous quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Berkshire Hathaway has the largest position in Costco Wholesale Corporation (NASDAQ:COST), worth close to $626.5 million, corresponding to 0.5% of its total 13F portfolio. On Berkshire Hathaway’s heels is Alkeon Capital Management, managed by Panayotis Takis Sparaggis, which holds a $155.8 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Ken Griffin’s Citadel Investment Group, Richard Chilton’s Chilton Investment Company, and Cliff Asness’ AQR Capital Management.
Judging by the fact that Costco Wholesale Corporation (NASDAQ:COST) has experienced a declination in interest from the smart money, it’s safe to say that there is a sect of funds that elected to cut their full holdings heading into Q4. Intriguingly, Matthew Tewksbury’s Stevens Capital Management sold off the biggest stake of the 700 funds tracked by Insider Monkey, comprising close to $15.5 million in stock. Peter Muller’s fund, PDT Partners, also cut its stock, about $11.2 million worth of shares. These moves are important to note, as total hedge fund interest dropped by 6 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Costco Wholesale Corporation (NASDAQ:COST) but similarly valued. We will take a look at Priceline.com Inc (NASDAQ:PCLN), Barclays PLC (ADR) (NYSE:BCS), Rio Tinto plc (ADR) (NYSE:RIO), and Morgan Stanley (NYSE:MS). All of these stocks’ market caps are similar to Costco Wholesale Corporation (NASDAQ:COST)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PCLN | 86 | 7082014 | 15 |
| BCS | 15 | 324632 | 2 |
| RIO | 19 | 146726 | 1 |
| MS | 57 | 2391811 | 9 |
As you can see, these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $2.49 billion. That figure was $1.78 billion in Costco Wholesale Corporation (NASDAQ:COST)’s case. Priceline.com Inc (NASDAQ:PCLN) is the most popular stock in this table. On the other hand, Barclays PLC (ADR) (NYSE:BCS) is the least popular one with only 15 bullish hedge fund positions. Costco Wholesale Corporation (NASDAQ:COST) 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, Priceline.com Inc (NASDAQ:PCLN) might be a better candidate to consider a long position.
