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Here is What Hedge Funds Really Think About Ralph Lauren Corporation (RL)

We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Ralph Lauren Corporation (NYSE:RL) based on that data.

Is Ralph Lauren Corporation (NYSE:RL) undervalued? Money managers are turning less bullish. The number of bullish hedge fund positions fell by 4 lately. Our calculations also showed that RL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are a multitude of indicators market participants put to use to appraise their stock investments. A pair of the most underrated indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top investment managers can outperform their index-focused peers by a superb margin (see the details here).

Alexander Roepers of Atlantic Investment Management

Alexander Roepers of Atlantic Investment Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the key hedge fund action surrounding Ralph Lauren Corporation (NYSE:RL).

What have hedge funds been doing with Ralph Lauren Corporation (NYSE:RL)?

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards RL over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

RL_dec2019

Among these funds, Renaissance Technologies held the most valuable stake in Ralph Lauren Corporation (NYSE:RL), which was worth $396 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $137.1 million worth of shares. Arrowstreet Capital, Millennium Management, and Bridgewater Associates 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 Armistice Capital allocated the biggest weight to Ralph Lauren Corporation (NYSE:RL), around 1.47% of its portfolio. Atlantic Investment Management is also relatively very bullish on the stock, dishing out 0.44 percent of its 13F equity portfolio to RL.

Judging by the fact that Ralph Lauren Corporation (NYSE:RL) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of hedge funds that slashed their entire stakes heading into Q4. Intriguingly, Robert Pohly’s Samlyn Capital dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $13.7 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also cut its stock, about $13.2 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ralph Lauren Corporation (NYSE:RL) but similarly valued. These stocks are Cabot Oil & Gas Corporation (NYSE:COG), NovoCure Limited (NASDAQ:NVCR), 58.com Inc (NYSE:WUBA), and Sociedad Quimica y Minera de Chile S.A. (NYSE:SQM). This group of stocks’ market caps resemble RL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
COG 38 667348 1
NVCR 22 375699 0
WUBA 24 331607 2
SQM 8 19977 1
Average 23 348658 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $349 million. That figure was $843 million in RL’s case. Cabot Oil & Gas Corporation (NYSE:COG) is the most popular stock in this table. On the other hand Sociedad Quimica y Minera de Chile S.A. (NYSE:SQM) is the least popular one with only 8 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 calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on RL as the stock returned 12.4% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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