Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Accenture Plc (NYSE:ACN) based on that data and determine whether they were really smart about the stock.
Accenture Plc (NYSE:ACN) investors should be aware of a decrease in enthusiasm from smart money lately. Accenture Plc (NYSE:ACN) was in 44 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 49. There were 49 hedge funds in our database with ACN holdings at the end of March. Our calculations also showed that ACN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we're going to view the key hedge fund action regarding Accenture Plc (NYSE:ACN).
What does smart money think about Accenture Plc (NYSE:ACN)?
At second quarter's end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. By comparison, 38 hedge funds held shares or bullish call options in ACN a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness's AQR Capital Management has the number one position in Accenture Plc (NYSE:ACN), worth close to $307.7 million, corresponding to 0.5% of its total 13F portfolio. The second largest stake is held by Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $159 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions contain Ken Griffin's Citadel Investment Group, Kevin Oram and Peter Uddo's Praesidium Investment Management Company and Guardian Capital's GuardCap Asset Management. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Accenture Plc (NYSE:ACN), around 7.62% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, setting aside 6.47 percent of its 13F equity portfolio to ACN.
Judging by the fact that Accenture Plc (NYSE:ACN) has witnessed falling interest from the smart money, it's easy to see that there is a sect of funds who were dropping their entire stakes by the end of the second quarter. At the top of the heap, Rajiv Jain's GQG Partners dropped the largest position of all the hedgies watched by Insider Monkey, comprising about $177.6 million in stock. Dipak Patel's fund, Alight Capital, also cut its stock, about $4.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 5 funds by the end of the second quarter.
Let's check out hedge fund activity in other stocks similar to Accenture Plc (NYSE:ACN). We will take a look at Costco Wholesale Corporation (NASDAQ:COST), Bristol Myers Squibb Company (NYSE:BMY), T-Mobile US, Inc. (NYSE:TMUS), Sanofi (NYSE:SNY), Broadcom Inc (NASDAQ:AVGO), BHP Group (NYSE:BHP), and Danaher Corporation (NYSE:DHR). This group of stocks' market valuations are closest to ACN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COST,61,4730681,-7 BMY,136,6605597,10 TMUS,113,7158311,48 SNY,24,1220415,9 AVGO,59,2378523,9 BHP,16,761158,-2 DHR,76,4287603,13 Average,69.3,3877470,11.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 69.3 hedge funds with bullish positions and the average amount invested in these stocks was $3877 million. That figure was $1080 million in ACN's case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 16 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 overall hedge fund sentiment score for ACN is 38.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately ACN wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ACN investors were disappointed as the stock returned 12.2% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.