Sepio Capital Reduces Stake in Costco by 6.8% Amid Investor Activity

Sepio Capital LP has decreased its investment in Costco Wholesale Corporation (NASDAQ: COST) by 6.8%, selling 368 shares during the second quarter of 2023. According to the firm’s latest filing with the Securities and Exchange Commission (SEC), Sepio Capital now holds a total of 5,031 shares valued at approximately $4,981,000. This adjustment reflects a broader trend among institutional investors as they actively manage their stakes in the retail giant.

Several prominent investors have recently modified their positions in Costco. Notably, Norges Bank acquired a substantial new stake in the retailer, amounting to $5.69 billion in the second quarter. Similarly, Nuveen LLC entered a new position valued at $3.46 billion during the first quarter.

In a remarkable increase, Kingstone Capital Partners Texas LLC expanded its holdings by a staggering 418,980.3%, now owning 2,359,422 shares worth about $2.34 billion. Furthermore, Laurel Wealth Advisors LLC also made headlines by increasing its stake by 96,316.6%, owning 1,378,758 shares valued at approximately $1.36 billion. Vanguard Group Inc. added to its position by 1.7%, holding a total of 43,356,271 shares, worth around $42.92 billion. As a result, institutional investors now control 68.48% of Costco’s stock.

Analysts Provide Mixed Ratings on Costco

Brokerage firms have begun weighing in on Costco’s stock performance. Wolfe Research initiated coverage on September 18, 2023, assigning a “peer perform” rating. Following closely, Hovde Group issued a “market perform” rating with a price target of $16.00.

On September 30, Daiwa Capital Markets lowered its price target from $1,005.00 to $947.00, maintaining a “neutral” rating. In contrast, BTIG Research started coverage on October 14, issuing a “buy” rating with a target price of $1,115.00. Lastly, Truist Financial adjusted its target down from $1,042.00 to $1,033.00, recommending a “hold” rating.

Currently, 18 equity research analysts have assigned a “buy” rating to Costco, while 13 analysts have issued a “hold” rating, yielding an average rating of “Moderate Buy” with a consensus target price of $1,025.07, according to data from MarketBeat.

Insider Selling and Company Performance

In addition to institutional trading, insider activity at Costco has also drawn attention. Executive Vice President Claudine Adamo sold 2,700 shares on October 24, 2023, at an average price of $935.68, resulting in a transaction worth $2,526,336.00. Following this sale, Adamo’s ownership decreased by 28.27%, leaving her with 6,851 shares valued at approximately $6.41 million.

On November 7, William Richard Wilcox, another executive vice president, sold 2,400 shares at an average price of $930.13, totaling $2,232,312.00. After this transaction, Wilcox owned 2,000 shares, valued at about $1.86 million, marking a 54.55% reduction in his holdings. Over the last three months, insiders have sold 9,720 shares worth approximately $9.01 million, representing 0.18% of the company’s total stock.

Costco’s stock opened at $912.90 on Monday, reflecting a modest increase of 0.5%. The company has experienced a 12-month low of $871.71 and a high of $1,078.23. With a market capitalization of $404.58 billion, Costco operates with a price-to-earnings ratio of 50.13 and a debt-to-equity ratio of 0.20.

On September 25, Costco released its quarterly earnings, reporting earnings per share (EPS) of $5.87, surpassing the consensus estimate of $5.81 by $0.06. The retailer’s revenue for the quarter reached $86.16 billion, exceeding analyst expectations of $86.01 billion. Compared to the same period last year, Costco’s revenue rose by 8.1%.

In a further positive development, Costco declared a quarterly dividend of $1.30 per share, paid on November 14, 2023, to stockholders of record as of October 31. This dividend represents an annualized payout of $5.20, yielding 0.6% with a dividend payout ratio of 28.56%.

Founded in 1983, Costco Wholesale Corporation operates membership warehouses in multiple countries, including the United States, Canada, Mexico, and various nations in Europe and Asia. The company offers a wide range of branded and private-label products, serving millions of members globally.