Is RL Stock A Buy or Sell?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Ralph Lauren Corporation (NYSE:RL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is RL stock a buy? Ralph Lauren Corporation (NYSE:RL) was in 35 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 39. RL investors should pay attention to an increase in support from the world’s most elite money managers of late. There were 29 hedge funds in our database with RL positions at the end of the third quarter. Our calculations also showed that RL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Yacktman of Yacktman Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a glance at the latest hedge fund action regarding Ralph Lauren Corporation (NYSE:RL).

Do Hedge Funds Think RL Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. By comparison, 37 hedge funds held shares or bullish call options in RL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Ralph Lauren Corporation (NYSE:RL) was held by Renaissance Technologies, which reported holding $133.5 million worth of stock at the end of December. It was followed by Yacktman Asset Management with a $83.2 million position. Other investors bullish on the company included Arrowstreet Capital, Adage Capital Management, and Royce & Associates. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to Ralph Lauren Corporation (NYSE:RL), around 11.7% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, setting aside 1.03 percent of its 13F equity portfolio to RL.

Now, some big names have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the most outsized position in Ralph Lauren Corporation (NYSE:RL). Adage Capital Management had $72.6 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $50.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Jack Woodruff’s Candlestick Capital Management, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.

Let’s now review hedge fund activity in other stocks similar to Ralph Lauren Corporation (NYSE:RL). These stocks are Euronet Worldwide, Inc. (NASDAQ:EEFT), Quidel Corporation (NASDAQ:QDEL), The Gap Inc. (NYSE:GPS), Gerdau SA (NYSE:GGB), Hyatt Hotels Corporation (NYSE:H), AECOM (NYSE:ACM), and Berry Global Group Inc (NYSE:BERY). This group of stocks’ market valuations are similar to RL’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $666 million. That figure was $790 million in RL’s case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 15 bullish hedge fund positions. Ralph Lauren Corporation (NYSE:RL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RL is 80.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on RL as the stock returned 15.6% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.