Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Costco Wholesale Corporation (COST), Paypal Holdings Inc (PYPL) & More: Why Are These Four Stocks Trending?

Shares of Costco Wholesale Corporation (NASDAQ:COST), American Express Company (NYSE:AXP)Paypal Holdings Inc (NASDAQ:PYPL), and Macy’s, Inc. (NYSE:M) are trending after various investment banks changed their ratings on the equities. Let’s take a closer look at why the banks changed their ratings and analyze relevant hedge fund sentiment toward the stocks.


We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

Costco Wholesale Corporation (NASDAQ:COST) is trending after the analysts at UBS upgraded the retailer to ‘Buy’ from ‘Neutral’, and assigned the stock a $180 price target. UBS likes how the retailer is charging higher membership fees and switching to Visa from American Express. The increased membership fees and the credit card switch will boost Costco’s bottom line. Given Costco’s customers are generally more affluent than other big store customers, Costco will not lose many customers from raising prices. The smart money is bullish on Costco Wholesale Corporation (NASDAQ:COST). Of the elite 730 funds we track, 44 funds owned $1.54 billion worth of the company’s outstanding stock (representing 2.60% of the float) on June 30, versus 41 funds and $1.51 billion respectively a quarter earlier. Among them, Billionaire Warren Buffett‘s Berkshire Hathaway kept its position the same at 4.33 million shares, while Richard Chilton’s Chilton Investment Company increased its stake by 32% to 722,162 shares.

Follow Costco Wholesale Corp W (NASDAQ:COST)
Trade (NASDAQ:COST) Now!

American Express Company (NYSE:AXP) is down by 0.86% in morning trade after UBS downgraded the premium credit card company to ‘Sell’ from ‘Neutral’ and lowered their price target to $67 from $81. The analysts at UBS don’t think American Express can achieve its long term guidance of around 12-15% EPS growth ‘any time in the next several years’. The analysts also expect American Express to lose 8% of its card members and 18% of its card portfolio following Costco’s decision to switch to Visa instead of using American Express. The smart money is still bullish, however. 57 funds owned $15.84 billion of the company’s shares (representing 20.10% of the float) on June 30, versus 65 funds and $15.62 billion respectively on March 31. Warren Buffett’s Berkshire Hathaway owned 151.61 million at the end of June. American Express Company’s big buybacks should provide some support if the stock falls far enough.

Follow American Express Co (NYSE:AXP)
Trade (NYSE:AXP) Now!

On the next page, we examine why Paypal and Macy’s are trending.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.