Are we Paying too Much for Costco Wholesale Corporation (COST)?
Bell Global Equities Fund, managed by Bell Asset Management, released its May investor update. A copy of the letter can be downloaded here. The global equity market continued its rally in May, driven by accelerating AI infrastructure spending and a stronger-than-expected earnings season. The Fund (Platform Class) returned 2.1%, underperforming the MSCI World ex-Australia Index's 4.5% return in May 2026. Information Technology holdings drove the positive return in the month, along with modest contributions from Health Care and Consumer Discretionary exposures. However, the portfolio underperformed compared to the benchmark, primarily due to the high returns from the benchmark's mega-cap technology and semiconductor stocks. In addition, please check the Strategy's top five holdings to know its best picks in 2026.
In its May 2026 investor letter, Bell Global Equities Fund highlighted Costco Wholesale Corporation (NASDAQ:COST). Costco Wholesale Corporation (NASDAQ:COST) is a leading US-based multinational retailer that specializes in the operation of membership-only warehouses. On July 8, 2026, Costco Wholesale Corporation (NASDAQ:COST) closed at $953.13 per share, reflecting a market capitalization of $422.69 billion. Costco Wholesale Corporation (NASDAQ:COST) posted a one-month return of -6.42%, and its shares lost 5.89% over the past 52 weeks.
Bell Global Equities Fund stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its May 2026 investor update:
"In a similar vein, we also exited our position in Costco Wholesale Corporation (NASDAQ:COST), where we felt the premium valuation – at approximately 45x forward earnings – meant the risk-reward profile on a forward-looking basis was no longer compelling, particularly at a time when many other high-quality companies have seen their valuations de-rate materially lower. We continue to believe Costco is a great business and have held the position in the portfolio for over 12 years, during which time the stock delivered a total shareholder return of approximately 1,000% ~21% CAR. Ultimately, competition for capital within the portfolio is as intense as ever following the underperformance of other high quality companies, and we will continue to monitor Costco closely for a reinvestment opportunity. Among other exits during the month, the decision was more for fundamental changes to our thesis. This included Pool Corporation, following the abrupt and inadequately explained departure of long-standing CE Peter Arvan, and Copart, where industry data and competitor read-throughs signalled the long-awaited growth turnaround was not yet materialising."
Costco Wholesale Corporation (NASDAQ:COST) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 107 hedge fund portfolios held Costco Wholesale Corporation (NASDAQ:COST) at the end of the first quarter, up from 106 in the previous quarter. While we acknowledge the potential of Costco Wholesale Corporation (NASDAQ:COST) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
In another article, we covered Costco Wholesale Corporation (NASDAQ:COST) and shared RiverPark Large Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.