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Ross Stores, Inc. (ROST): Hedge Funds Are Bullish and Insiders Are Undecided, What Should You Do?

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Now, according to many market players, hedge funds are perceived as bloated, outdated financial vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open in present day, this site focuses on the upper echelon of this group, close to 525 funds. It is assumed that this group oversees most of the hedge fund industry’s total capital, and by monitoring their highest quality stock picks, we’ve brought to light a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as useful, positive insider trading sentiment is another way to look at the marketplace. There are lots of reasons for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this method if shareholders know where to look (learn more here).

Furthermore, let’s examine the recent info about Ross Stores, Inc. (NASDAQ:ROST).

How have hedgies been trading Ross Stores, Inc. (NASDAQ:ROST)?

At the end of the second quarter, a total of 37 of the hedge funds we track held long positions in this stock, a change of 9% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly.

Ross Stores, Inc. (NASDAQ:ROST)Out of the hedge funds we follow, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Ross Stores, Inc. (NASDAQ:ROST). Citadel Investment Group has a $125.7 million position in the stock, comprising 0.2% of its 13F portfolio. On Citadel Investment Group’s heels is Charles Akre of Akre Capital Management, with a $105.7 million position; the fund has 4.8% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Israel Englander’s Millennium Management, Patrick McCormack’s Tiger Consumer Management and Steven Cohen’s SAC Capital Advisors.

As industrywide interest increased, certain bigger names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the largest position in Ross Stores, Inc. (NASDAQ:ROST). Citadel Investment Group had 125.7 million invested in the company at the end of the quarter. Charles Akre’s Akre Capital Management also initiated a $105.7 million position during the quarter. The following funds were also among the new ROST investors: Israel Englander’s Millennium Management, Patrick McCormack’s Tiger Consumer Management, and Steven Cohen’s SAC Capital Advisors.

What have insiders been doing with Ross Stores, Inc. (NASDAQ:ROST)?

Legal insider trading, particularly when it’s bullish, is particularly usable when the company in focus has seen transactions within the past six months. Over the latest six-month time frame, Ross Stores, Inc. (NASDAQ:ROST) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Ross Stores, Inc. (NASDAQ:ROST). These stocks are Urban Outfitters, Inc. (NASDAQ:URBN), The Gap Inc. (NYSE:GPS), Nordstrom, Inc. (NYSE:JWN), Michael Kors Holdings Ltd (NYSE:KORS), and Limited Brands, Inc. (NYSE:LTD). This group of stocks are the members of the apparel stores industry and their market caps resemble ROST’s market cap.

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