The Funds With the Most Exposure to Target Stock

Target’s TGT stock plummeted more than 21% after the firm announced third-quarter earnings on Wednesday. The company’s reported revenue and earnings per share both came in well below analyst expectations, and management also lowered its EPS guidance for the year from $9.00-$9.70 to $8.30-$8.90.

This dented some funds with big holdings in the retailer. Among the names taking hits are the $16.4 billion Consumer Staples Select Sector SPDR ETF XLP, the $226 million VanEck Retail ETF RTH, and the $22 million Saratoga Large Capitalization Value SLCVX.

While the big box store’s earnings sent its stock down to $122 from over $155 earlier this week, most fund investors likely won’t see major moves in their portfolios. The largest index exchange-traded fund, the SPDR S&P 500 ETF Trust SPY, had only a 0.15% weighting for the stock. The Morningstar US Market Index was flat on the day.

The Consumer Staples Select ETF has the largest allocation to Target of any US stock fund, giving it a 4.2% weighting (the fund’s eighth-biggest holding). The VanEck Retail ETF has the second-largest allocation, giving Target a 4.1% weighting. The rest of the top 10 largest holders are a mixture of value, dividend, and consumer staples sector funds.

Looking at Target’s results, Morningstar equity analyst Noah Rohr wrote: “Modest growth in high-frequency categories was largely offset by weak demand for discretionary items, as management indicated that consumers have grown increasingly selective with their spending. With nearly half of Target’s sales tied to apparel, hardlines, and home furnishings, we acknowledge that the firm is amply exposed to cyclical swings in consumers’ spending capacity.”

This was Target’s third-largest one-day loss in its history. Two years ago, when the stock dropped by 24.9% after a worse-than-expected earnings report, its largest weightings were in growth funds, such as the Columbia Large Cap Growth Opportunity Fund CADRX (which had a 4.3% weight) and the $1 billion American Century US Quality Growth ETF QGRO. Now all the stock’s top 10 holders are value or sector funds. Today, the American Century fund has a 0.28% allocation to Target, while the Columbia fund no longer holds it.