How Accenture Plc (ACN) Compares Against These Peers
The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Accenture Plc (NYSE:ACN).
Is Accenture Plc (NYSE:ACN) a buy here? The smart money is in a bearish mood. The number of long hedge fund positions fell by 2 lately. Our calculations also showed that ACN isn't among the 30 most popular stocks among hedge funds (see the video below). ACN was in 38 hedge funds' portfolios at the end of June. There were 40 hedge funds in our database with ACN positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the latest hedge fund action surrounding Accenture Plc (NYSE:ACN).
How are hedge funds trading Accenture Plc (NYSE:ACN)?
Heading into the third quarter of 2019, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in ACN a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Accenture Plc (NYSE:ACN) was held by AQR Capital Management, which reported holding $294.1 million worth of stock at the end of March. It was followed by Praesidium Investment Management Company with a $170 million position. Other investors bullish on the company included Adage Capital Management, Citadel Investment Group, and Intermede Investment Partners.
Due to the fact that Accenture Plc (NYSE:ACN) has witnessed declining sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of hedge funds that decided to sell off their entire stakes by the end of the second quarter. Interestingly, Matthew Tewksbury's Stevens Capital Management dumped the largest investment of the 750 funds watched by Insider Monkey, comprising an estimated $3.9 million in stock, and John Zaro's Bourgeon Capital was right behind this move, as the fund dropped about $3.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the second quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Accenture Plc (NYSE:ACN) but similarly valued. These stocks are salesforce.com, inc. (NYSE:CRM), HDFC Bank Limited (NYSE:HDB), Broadcom Inc (NASDAQ:AVGO), and Costco Wholesale Corporation (NASDAQ:COST). This group of stocks' market values match ACN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRM,82,5803927,-11 HDB,27,1159846,3 AVGO,53,3268502,0 COST,40,3254378,-4 Average,50.5,3371663,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 50.5 hedge funds with bullish positions and the average amount invested in these stocks was $3372 million. That figure was $1029 million in ACN's case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand HDFC Bank Limited (NYSE:HDB) is the least popular one with only 27 bullish hedge fund positions. Accenture Plc (NYSE:ACN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on ACN, though not to the same extent, as the stock returned 4.1% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
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