Is Costco Wholesale Corporation (NASDAQ:COST) a first-rate investment today? Money managers are turning bullish. The number of bullish hedge fund positions improved by 1 lately.
In the 21st century investor’s toolkit, there are tons of gauges market participants can use to watch stocks. Two of the most useful are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce their index-focused peers by a superb amount (see just how much).
Just as key, optimistic insider trading sentiment is another way to parse down the financial markets. There are many stimuli for an insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this tactic if you know where to look (learn more here).
Now, let’s take a gander at the recent action regarding Costco Wholesale Corporation (NASDAQ:COST).
What have hedge funds been doing with Costco Wholesale Corporation (NASDAQ:COST)?
At Q1’s end, a total of 41 of the hedge funds we track held long positions in this stock, a change of 3% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully.
When looking at the hedgies we track, Warren Buffett’s Berkshire Hathaway had the largest position in Costco Wholesale Corporation (NASDAQ:COST), worth close to $459.8 million, comprising 0.5% of its total 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $126.4 million position; the fund has 1% of its 13F portfolio invested in the stock. Other peers that are bullish include Panayotis Takis Sparaggis’s Alkeon Capital Management, Jim Simons’s Renaissance Technologies and Richard Chilton’s Chilton Investment Company.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Costco Wholesale Corporation (NASDAQ:COST) headfirst. Stevens Capital Management, managed by Matthew Tewksbury, initiated the most outsized position in Costco Wholesale Corporation (NASDAQ:COST). Stevens Capital Management had 29.7 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also initiated a $17.9 million position during the quarter. The following funds were also among the new COST investors: Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors, and John Horseman’s Horseman Capital Management.
Insider trading activity in Costco Wholesale Corporation (NASDAQ:COST)
Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the last half-year time period, Costco Wholesale Corporation (NASDAQ:COST) has seen zero unique insiders buying, and 14 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Costco Wholesale Corporation (NASDAQ:COST). These stocks are Family Dollar Stores, Inc. (NYSE:FDO), Wal-Mart Stores, Inc. (NYSE:WMT), Dollar Tree, Inc. (NASDAQ:DLTR), Dollar General Corp. (NYSE:DG), and Target Corporation (NYSE:TGT). All of these stocks are in the discount, variety stores industry and their market caps are closest to COST’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Family Dollar Stores, Inc. (NYSE:FDO)||27||0||3|
|Wal-Mart Stores, Inc. (NYSE:WMT)||52||0||4|
|Dollar Tree, Inc. (NASDAQ:DLTR)||40||0||2|
|Dollar General Corp. (NYSE:DG)||61||2||9|
|Target Corporation (NYSE:TGT)||33||0||8|
With the returns exhibited by Insider Monkey’s studies, retail investors must always monitor hedge fund and insider trading activity, and Costco Wholesale Corporation (NASDAQ:COST) is no exception.