Where Do Hedge Funds Stand On Ross Stores, Inc. (ROST)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Ross Stores, Inc. (NASDAQ:ROST) in this article.

Is Ross Stores, Inc. (NASDAQ:ROST) a buy here? The best stock pickers were taking a bearish view. The number of bullish hedge fund positions went down by 9 lately. Ross Stores, Inc. (NASDAQ:ROST) was in 48 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 57. Our calculations also showed that ROST isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 57 hedge funds in our database with ROST positions at the end of the fourth quarter.

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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Gavin Saitowitz of Prelude Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 let’s view the recent hedge fund action regarding Ross Stores, Inc. (NASDAQ:ROST).

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

At the end of March, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ROST over the last 23 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

More specifically, Alkeon Capital Management was the largest shareholder of Ross Stores, Inc. (NASDAQ:ROST), with a stake worth $188.5 million reported as of the end of March. Trailing Alkeon Capital Management was Citadel Investment Group, which amassed a stake valued at $167.9 million. Suvretta Capital Management, Hound Partners, and Adage Capital Management 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 9.31% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, setting aside 5.06 percent of its 13F equity portfolio to ROST.

Seeing as Ross Stores, Inc. (NASDAQ:ROST) has witnessed declining sentiment from the smart money, it’s easy to see that there was a specific group of hedge funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management dropped the largest investment of the 750 funds watched by Insider Monkey, valued at about $58.3 million in stock. Jack Woodruff’s fund, Candlestick Capital Management, also said goodbye to its stock, about $36.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 9 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ross Stores, Inc. (NASDAQ:ROST) but similarly valued. These stocks are Exelon Corporation (NASDAQ:EXC), TE Connectivity Ltd. (NYSE:TEL), Biogen Inc. (NASDAQ:BIIB), Palantir Technologies Inc. (NYSE:PLTR), EOG Resources Inc (NYSE:EOG), Roper Technologies Inc. (NYSE:ROP), and DoorDash, Inc. (NYSE:DASH). This group of stocks’ market values match ROST’s market value.

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As you can see these stocks had an average of 41.1 hedge funds with bullish positions and the average amount invested in these stocks was $1996 million. That figure was $977 million in ROST’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand EOG Resources Inc (NYSE:EOG) is the least popular one with only 30 bullish hedge fund positions. Ross Stores, Inc. (NASDAQ:ROST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ROST is 48.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 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 -3.6% since the end of March (through 6/18) 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 many of these stocks already outperformed the market since 2019.

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