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Should You Buy Costco Wholesale Corporation (NASDAQ:COST)?

Costco Wholesale Corporation (NASDAQ:COST) was in 38 hedge funds’ portfolio at the end of the fourth quarter of 2012. COST investors should be aware of an increase in enthusiasm from smart money of late. There were 33 hedge funds in our database with COST positions at the end of the previous quarter.

In the 21st century investor’s toolkit, there are plenty of methods market participants can use to track publicly traded companies. Some of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best fund managers can beat the broader indices by a solid margin (see just how much).

Costco Wholesale Corporation (NASDAQ:COST)Equally as important, positive insider trading activity is a second way to parse down the stock market universe. There are plenty of incentives for an insider to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).

With all of this in mind, it’s important to take a look at the key action surrounding Costco Wholesale Corporation (NASDAQ:COST).

What does the smart money think about Costco Wholesale Corporation (NASDAQ:COST)?

In preparation for this year, a total of 38 of the hedge funds we track were long in this stock, a change of 15% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Berkshire Hathaway, managed by Warren Buffett, holds the most valuable position in Costco Wholesale Corporation (NASDAQ:COST). Berkshire Hathaway has a $428 million position in the stock, comprising 0.6% of its 13F portfolio. On Berkshire Hathaway’s heels is Renaissance Technologies, managed by Jim Simons, which held a $172 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Panayotis æTakisÆ Sparaggis’s Alkeon Capital Management.

Consequently, specific money managers were leading the bulls’ herd. Soros Fund Management, managed by George Soros, established the most valuable position in Costco Wholesale Corporation (NASDAQ:COST). Soros Fund Management had 40 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $32 million investment in the stock during the quarter. The other funds with brand new COST positions are Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Michael Messner’s Seminole Capital (Investment Mgmt), and Anand Parekh’s Alyeska Investment Group.

What have insiders been doing with Costco Wholesale Corporation (NASDAQ:COST)?

Insider buying is best served when the company in focus has experienced transactions within the past half-year. Over the latest half-year time frame, Costco Wholesale Corporation (NASDAQ:COST) has seen zero unique insiders buying, and 13 insider sales (see the details of insider trades here).

With the returns demonstrated by the aforementioned research, everyday investors must always watch hedge fund and insider trading activity, and Costco Wholesale Corporation (NASDAQ:COST) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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