Earlier today The Home Depot, Inc. (NYSE:HD) announced that the data breach of 2014 resulted in a $2 million pre-tax expense in the first quarter. The Atlanta based home improvement retailer also said that it has not set aside an accrual for costs related to the security breach because of its inability to estimate a range for the costs. Last week, a US federal judge said that multiple suits against Home Depot regarding the security breach of 2014 which led to the financial data compromise of 56 million customers can result in a trial. The 10-Q report also showed that The Home Depot recorded $16 million in pretax expenses related to the data breach in the previous fiscal year and the total pretax gross expenses related to the data breach amounted to $263 million since the incident, offset by $100 million of the expected insurance proceeds. The stock is moving slightly higher on Tuesday, which should please hedge funds as they piled into the stock during the first quarter. The number of long hedge fund positions in Home Depot increased by 12 lately and, at the end of March, 74 funds tracked by Insider Monkey reported holding shares of the company.
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According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the largest position in The Home Depot, Inc. (NYSE:HD), worth close to $1.1421 billion, corresponding to 2.2% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $359.5 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Cliff Asness’s AQR Capital Management, John Armitage’s Egerton Capital Limited and Ryan Pedlow’s Two Creeks Capital Management.
On the next page, we are going to take a look at the new action surrounding The Home Depot. At the end of this article we will also compare HD to other stocks, including Visa Inc (NYSE:V), Toyota Motor Corporation (ADR) (NYSE:TM), and The Walt Disney Company (NYSE:DIS) to get a better sense of its popularity.
As aggregate interest increased, key hedge funds have jumped into The Home Depot, Inc. (NYSE:HD) headfirst. Discovery Capital Management, managed by Rob Citrone, assembled the most outsized position in The Home Depot, Inc. (NYSE:HD). Discovery Capital Management had $108.3 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $76.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Andreas Halvorsen’s Viking Global, Gabriel Plotkin’s Melvin Capital Management, and Alexander Mitchell’s Scopus Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Home Depot, Inc. (NYSE:HD) but similarly valued. These stocks are Visa Inc (NYSE:V), Toyota Motor Corporation (ADR) (NYSE:TM), The Walt Disney Company (NYSE:DIS), and Intel Corporation (NASDAQ:INTC). This group of stocks’ market caps are similar to HD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| V | 106 | 9215499 | 5 |
| TM | 12 | 269374 | -1 |
| DIS | 49 | 3092578 | -2 |
| INTC | 54 | 3957204 | -2 |
As you can see these stocks had an average of 55 hedge funds with bullish positions and the average amount invested in these stocks was $4134 million. That figure was $4635 million in HD’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Toyota Motor Corporation (ADR) (NYSE:TM) is the least popular one with only 12 bullish hedge fund positions. The Home Depot, Inc. (NYSE:HD) 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, Visa might be a better candidate to consider a long position.
Disclosure: None
