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Hedge Funds Are Cashing Out Of Ross Stores, Inc. (ROST)

·5-min read

We at Insider Monkey have gone over 867 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 Ross Stores, Inc. (NASDAQ:ROST) based on that data.

Ross Stores, Inc. (NASDAQ:ROST) shareholders have witnessed a decrease in support from the world's most elite money managers lately. Ross Stores, Inc. (NASDAQ:ROST) was in 41 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 57. There were 51 hedge funds in our database with ROST positions at the end of the second quarter. Our calculations also showed that ROST isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Noam Gottesman GLG Partners
Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind let's take a gander at the latest hedge fund action regarding Ross Stores, Inc. (NASDAQ:ROST).

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

At the end of the third quarter, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ROST over the last 25 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ROST A Good Stock To Buy?
Is ROST A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the biggest position in Ross Stores, Inc. (NASDAQ:ROST). Alkeon Capital Management has a $170.7 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $132.2 million position; 0.2% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions include Noam Gottesman's GLG Partners, Brandon Haley's Holocene Advisors and Aaron Cowen's Suvretta Capital Management. In terms of the portfolio weights assigned to each position Masterton Capital Management allocated the biggest weight to Ross Stores, Inc. (NASDAQ:ROST), around 8.26% of its 13F portfolio. Bridger Management is also relatively very bullish on the stock, earmarking 4.44 percent of its 13F equity portfolio to ROST.

Because Ross Stores, Inc. (NASDAQ:ROST) has witnessed falling interest from the smart money, we can see that there is a sect of money managers that slashed their full holdings by the end of the third quarter. At the top of the heap, Anand Parekh's Alyeska Investment Group dumped the largest stake of the 750 funds followed by Insider Monkey, valued at an estimated $43.1 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dumped about $36.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 10 funds by the end of the third quarter.

Let's now review hedge fund activity in other stocks similar to Ross Stores, Inc. (NASDAQ:ROST). We will take a look at ResMed Inc. (NYSE:RMD), Republic Services, Inc. (NYSE:RSG), SVB Financial Group (NASDAQ:SIVB), Travelers Companies Inc (NYSE:TRV), Kinder Morgan Inc (NYSE:KMI), The Allstate Corporation (NYSE:ALL), and DiDi Global Inc. (NYSE:DIDI). This group of stocks' market valuations are closest to ROST's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RMD,28,396289,2 RSG,31,1222055,-3 SIVB,45,1207137,-4 TRV,32,433119,-2 KMI,43,1012275,5 ALL,27,821166,-6 DIDI,15,701653,15 Average,31.6,827671,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $828 million. That figure was $1220 million in ROST's case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand DiDi Global Inc. (NYSE:DIDI) is the least popular one with only 15 bullish hedge fund positions. Ross Stores, Inc. (NASDAQ:ROST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ROST is 59.9. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately ROST wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ROST were disappointed as the stock returned 0.2% since the end of September (through 11/30) 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.

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

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