Does Ralph Lauren Corporation (NYSE:RL) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Ralph Lauren Corporation (NYSE:RL) was in 34 hedge funds’ portfolios at the end of the first quarter of 2019. RL has experienced an increase in hedge fund sentiment of late. There were 31 hedge funds in our database with RL positions at the end of the previous quarter. Our calculations also showed that RL isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 go over the fresh hedge fund action encompassing Ralph Lauren Corporation (NYSE:RL).
How are hedge funds trading Ralph Lauren Corporation (NYSE:RL)?
Heading into the second quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in RL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Ralph Lauren Corporation (NYSE:RL), which was worth $510.3 million at the end of the first quarter. On the second spot was AQR Capital Management which amassed $248.4 million worth of shares. Moreover, Millennium Management, Marshall Wace LLP, and Two Sigma Advisors were also bullish on Ralph Lauren Corporation (NYSE:RL), allocating a large percentage of their portfolios to this stock.
Now, specific money managers have been driving this bullishness. Scopus Asset Management, managed by Alexander Mitchell, initiated the biggest position in Ralph Lauren Corporation (NYSE:RL). Scopus Asset Management had $49.1 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $47.8 million investment in the stock during the quarter. The other funds with brand new RL positions are Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, Guy Shahar’s DSAM Partners, and Robert Pohly’s Samlyn Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ralph Lauren Corporation (NYSE:RL) but similarly valued. These stocks are Trimble Inc. (NASDAQ:TRMB), Shaw Communications Inc (NYSE:SJR), Iron Mountain Incorporated (NYSE:IRM), and Sociedad Química y Minera de Chile S.A. (NYSE:SQM). All of these stocks’ market caps resemble RL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRMB | 14 | 572902 | -3 |
| SJR | 12 | 275762 | -2 |
| IRM | 18 | 149930 | 7 |
| SQM | 9 | 41684 | 1 |
| Average | 13.25 | 260070 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $1434 million in RL’s case. Iron Mountain Incorporated (NYSE:IRM) is the most popular stock in this table. On the other hand Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Ralph Lauren Corporation (NYSE:RL) 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 RL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RL were disappointed as the stock returned -19% 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.
