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Hedgies Love This Stock

This retailing giant enjoyed a surge of hedge fund buying in the first quarter.

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Hedge fund managers are warming up to Walmart. It is still doubtful you’ll find this group of billionaires and billionaire wannabes roaming the aisles of the retailing giant hunting for discount merchandise, even at the store in Westport, Connecticut.

However, in the first quarter, a large number of hedgies either tossed this stock into their carts for the first time or added to their share totals. During that period, 32 hedge funds initiated positions in the retailer and just 14 bailed out altogether, for a net gain of 18 new investors — giving Walmart a total of 147 hedge fund investors as of the end of March, according to SEI Novus.

That was enough for it to rank as the 27th most widely held stock among hedge funds, according to perhaps the most comprehensive database of hedge fund stock holdings. This is one step behind tech favorite Oracle Corp. but ahead of Micron Technology and Applied Materials.

In fact, only five stocks with more hedge fund ownership than Walmart enjoyed a larger net increase in investors in the first quarter, an analysis of the database reveals. More striking: Ninety-nine existing Walmart investors added to their stakes and just six reduced their positions.

Only two stocks saw more existing stock owners add to their positions: Microsoft and Amazon, which are also the two most widely held hedge fund stocks, with more than twice the total ownership of Walmart. But no stock comes close to Walmart in terms of the differential between buys and sells, although there were more sellers than buyers of all 18 of the most widely held stocks.

Walmart’s bulls have certainly been rewarded so far in 2024. The stock is up nearly 27 percent year-to-date, more than many of the Magnificent Seven stocks, including Microsoft, Amazon, and Alphabet, and other high-flying tech stocks (but not, of course, Nvidia).

The largest new hedge fund investor in Walmart is computer-driven Two Sigma, the third-largest buyer of the stock in the first quarter. Other new investors included Maplelane Capital and WorldQuant Millennium Advisors.

Several major firms added significantly to their positions, including Renaissance Technologies and Balyasny Asset Management. Millennium Management and D.E. Shaw also boosted their stakes. Still, none of these firms count Walmart among their top-ten holdings.

Last month, Walmart reported quarterly earnings that beat analysts’ consensus estimates, with earnings per share coming in at $0.60 per share compared with the consensus estimate of $0.52. Its $161.5 billion in earnings exceeded estimates of $159.57 billion.

On Monday, Evercore ISI raised its target price from $70 to $72, maintaining its outperform rating. Several weeks ago, Barclays boosted its target price from $60 to $66 and kept its outperform rating, and Citigroup upped its target from $63 to $75 and maintained its buy rating.