The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Ross Stores, Inc. (NASDAQ:ROST).
Ross Stores, Inc. (NASDAQ:ROST) was in 51 hedge funds’ portfolios at the end of June. The all time high for this statistic is 57. ROST shareholders have witnessed an increase in hedge fund interest of late. There were 48 hedge funds in our database with ROST positions at the end of the first quarter. Our calculations also showed that ROST isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Aaron Cowen of Suvretta Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to analyze the latest hedge fund action encompassing Ross Stores, Inc. (NASDAQ:ROST).
Do Hedge Funds Think ROST Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 50 hedge funds with a bullish position in ROST a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Alkeon Capital Management held the most valuable stake in Ross Stores, Inc. (NASDAQ:ROST), which was worth $194.5 million at the end of the second quarter. On the second spot was D E Shaw which amassed $157 million worth of shares. GLG Partners, Suvretta Capital Management, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Masterton Capital Management allocated the biggest weight to Ross Stores, Inc. (NASDAQ:ROST), around 10.21% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, designating 4.87 percent of its 13F equity portfolio to ROST.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in Ross Stores, Inc. (NASDAQ:ROST). Arrowstreet Capital had $118.1 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $36.2 million investment in the stock during the quarter. The other funds with brand new ROST positions are John Overdeck and David Siegel’s Two Sigma Advisors, Brian J. Higgins’s King Street Capital, and Gregg Moskowitz’s Interval Partners.
Let’s go over hedge fund activity in other stocks similar to Ross Stores, Inc. (NASDAQ:ROST). These stocks are Trane Technologies plc (NYSE:TT), MSCI Inc (NYSE:MSCI), Chipotle Mexican Grill, Inc. (NYSE:CMG), Eni SpA (NYSE:E), Exelon Corporation (NYSE:EXC), Canadian Natural Resources Limited (NYSE:CNQ), and Simon Property Group, Inc (NYSE:SPG). This group of stocks’ market valuations are closest to ROST’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TT | 37 | 1250491 | 2 |
| MSCI | 37 | 772551 | -1 |
| CMG | 35 | 3204586 | -6 |
| E | 3 | 69407 | -1 |
| EXC | 35 | 1194570 | -9 |
| CNQ | 27 | 777129 | -2 |
| SPG | 37 | 666243 | 6 |
| Average | 30.1 | 1133568 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $1134 million. That figure was $1449 million in ROST’s case. Trane Technologies plc (NYSE:TT) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Ross Stores, Inc. (NASDAQ:ROST) is more popular among hedge funds. Our overall hedge fund sentiment score for ROST is 84.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Unfortunately ROST wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ROST were disappointed as the stock returned -3.3% since the end of the second quarter (through 11/5) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Ross Stores Inc. (NASDAQ:ROST)
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Disclosure: None. This article was originally published at Insider Monkey.
