Hedge Funds Are Selling Ralph Lauren Corporation (RL)

In this article we are going to use hedge fund sentiment as a tool and determine whether Ralph Lauren Corporation (NYSE:RL) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Ralph Lauren Corporation (NYSE:RL) a marvelous investment today? Investors who are in the know were becoming less hopeful. The number of bullish hedge fund positions were cut by 1 recently. Ralph Lauren Corporation (NYSE:RL) was in 34 hedge funds’ portfolios at the end of March. The all time high for this statistic is 39. Our calculations also showed that RL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

At the moment there are a multitude of gauges stock market investors have at their disposal to analyze stocks. A duo of the most under-the-radar gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top investment managers can outperform the S&P 500 by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. Keeping this in mind we’re going to take a look at the latest hedge fund action surrounding Ralph Lauren Corporation (NYSE:RL).

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

Heading into the second quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the fourth quarter of 2020. By comparison, 26 hedge funds held shares or bullish call options in RL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the biggest position in Ralph Lauren Corporation (NYSE:RL), worth close to $176.6 million, comprising 0.4% of its total 13F portfolio. The second most bullish fund manager is Yacktman Asset Management, led by Donald Yacktman, holding a $98.5 million position; 1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions contain Chuck Royce’s Royce & Associates, Noam Gottesman’s GLG Partners and Renaissance Technologies. In terms of the portfolio weights assigned to each position Newbrook Capital Advisors allocated the biggest weight to Ralph Lauren Corporation (NYSE:RL), around 5.02% of its 13F portfolio. Castle Hook Partners is also relatively very bullish on the stock, designating 2.02 percent of its 13F equity portfolio to RL.

Seeing as Ralph Lauren Corporation (NYSE:RL) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers who sold off their positions entirely heading into Q2. It’s worth mentioning that Alexander Roepers’s Atlantic Investment Management dumped the largest position of all the hedgies monitored by Insider Monkey, comprising close to $35.1 million in stock. Jack Woodruff’s fund, Candlestick Capital Management, also dumped its stock, about $25.9 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds heading into Q2.

Let’s also examine hedge fund activity in other stocks similar to Ralph Lauren Corporation (NYSE:RL). We will take a look at Nielsen Holdings plc (NYSE:NLSN), Zions Bancorporation, National Association (NASDAQ:ZION), Commerce Bancshares, Inc. (NASDAQ:CBSH), Store Capital Corporation (NYSE:STOR), RealPage, Inc. (NASDAQ:RP), Arch Coal Inc (NYSE:ACI), and Vereit Inc (NYSE:VER). All of these stocks’ market caps match RL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $1300 million. That figure was $955 million in RL’s case. RealPage, Inc. (NASDAQ:RP) is the most popular stock in this table. On the other hand Commerce Bancshares, Inc. (NASDAQ:CBSH) is the least popular one with only 13 bullish hedge fund positions. Ralph Lauren Corporation (NYSE:RL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RL is 58.5. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately RL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RL were disappointed as the stock returned -1% since the end of March (through 6/25) 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.

Suggested Articles:

• How to Best Use Insider Monkey To Increase Your Returns
• 10 Best Dividend Paying Stocks to Buy Under $50
• 10 Cheap Stocks Leon Cooperman Is Buying

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

Follow Insider Monkey on Twitter