Costco Wholesale Corporation

NASDAQ Global Select
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Slightly Bearish -15

Are we Paying too Much for Costco Wholesale Corporation (COST)?

AI-generated analysis

📉 Bell Global Equities Fund exited its position in Costco Wholesale Corporation (COST) during May 2026.

💰 The fund cited a premium valuation of approximately 45x forward earnings as the primary driver for the exit.

📊 Costco closed at $953.13 per share on July 8, 2026, with a market cap of $422.69 billion.

📉 The stock posted a one-month return of -6.42% and lost 5.89% over the past 52 weeks.

🤝 The fund manager stated they continue to believe Costco is a great business after holding it for over 12 years.

🚀 The portfolio underperformed the MSCI World ex-Australia Index in May, driven by mega-cap tech outperformance.

🧠 The fund believes AI stocks currently hold greater promise for delivering higher returns than Costco.

📉 Hedge fund holdings of COST decreased slightly to 107 portfolios at the end of Q1 2026 from 106 previously.

🔄 Other exits included Pool Corporation and Copart due to leadership changes and lack of growth materialization.

Bullish Signals
  • The fund manager explicitly states they continue to believe Costco is a great business despite the exit.
  • Costco has delivered a total shareholder return of approximately 1,000% over more than 12 years of ownership.
  • Hedge fund data shows sustained interest with 107 portfolios holding the stock at the end of Q1 2026.
Risk Factors
  • The fund exited due to a premium valuation of approximately 45x forward earnings, deeming the risk-reward profile unattractive.
  • The portfolio underperformed the benchmark in May 2026, partly attributed to high returns from mega-cap technology stocks.
  • The fund manager believes AI stocks currently offer higher promise for delivering returns in a shorter timeframe than Costco.
Full Analysis
Bell Global Equities Fund, managed by Bell Asset Management, announced in its May 2026 investor update that it exited its position in Costco Wholesale Corporation (NASDAQ:COST). The fund cited a premium valuation of approximately 45x forward earnings as the primary reason for the exit, arguing that the risk-reward profile was no longer compelling compared to other high-quality companies that had seen their valuations de-rate materially lower. The article notes that Costco closed at $953.13 per share on July 8, 2026, with a market capitalization of $422.69 billion. Despite the exit, the fund manager maintains that Costco remains a great business, highlighting a historical total shareholder return of approximately 1,000% over more than 12 years. The decision to sell was driven by intense competition for capital within the portfolio and a belief that AI stocks currently offer higher promise for delivering returns in a shorter timeframe. The fund manager also mentioned other exits during the month, including Pool Corporation following executive departures and Copart where growth turnaround signals were not yet materializing. While Costco is no longer on the fund's list of 40 most popular stocks heading into 2026, hedge fund data indicates that 107 portfolios still held the stock at the end of the first quarter, up slightly from the previous quarter.