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Why Costco Wholesale Corporation (COST)’s Shares Jumped on Thursday?

As one would reasonably expect, some big names have jumped into Costco Wholesale Corporation (NASDAQ:COST) headfirst. Melvin Capital Management, led by Gabriel Plotkin, established the biggest position in Costco Wholesale Corporation (NASDAQ:COST). Melvin Capital Management had $55.2 million invested in the company at the end of the first quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $47.3 million position during the quarter. The following funds were also among the new COST investors: Steve Cohen’s Point72 Asset Management, Matthew Tewksbury’s Stevens Capital Management, and James Parsons’s Junto Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Costco Wholesale Corporation (NASDAQ:COST). These stocks are Lowe’s Companies, Inc. (NYSE:LOW), Lockheed Martin Corporation (NYSE:LMT), Union Pacific Corporation (NYSE:UNP), and Goldman Sachs Group, Inc. (NYSE:GS). This group of stocks’ market values match COST’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LOW 64 4077477 -2
LMT 37 867131 0
UNP 54 1400670 -2
GS 69 4643865 10

As you can see these stocks had an average of 56 hedge funds with bullish positions and the average amount invested in these stocks was $2747 million. That figure was $1899 million in COST’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand Lockheed Martin Corporation (NYSE:LMT) is the least popular one with only 37 bullish hedge fund positions. Costco Wholesale Corporation (NASDAQ:COST) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GS might be a better candidate to consider a long position.

Disclosure: None

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