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Automatic Data Processing (ADP) Will Emerge Stronger From the COVID-19 Crisis

Alex Smith
·3 min read

Aoris Investment Management recently released its Q1 2020 Investor Letter, a copy of which you can download below. The Aoris International Fund aims to generate returns of 8–12% p.a. over a market cycle. The portfolio is long-only and highly selective. You should check out Aoris Investment Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Aoris Investment Management highlighted a few stocks and Automatic Data Processing Inc (NASDAQ:ADP) is one of them. Automatic Data Processing is a provider of human resources management software and services. Year-to-date, Automatic Data Processing Inc (NASDAQ:ADP) stock lost 22.3% and on May 21st it had a closing price of $133.32. Here is what Aoris Investment Management said:

"ADP is the world’s largest payroll processing company and provides many other HR-related services to its corporate clients, such as administration of retirement benefits. It benefits from scale, as well as a debt-free balance sheet and long-tenured management.

We expect sales this year to reflect a decline in payroll recipients and fewer new client wins. However, we also expect ADP to continue its long record of market share gains, benefiting from the fact that many of its competitors are unprofitable, and emerge from this period competitively stronger."

Automatic Data Processing (NASDAQ:ADP)
Automatic Data Processing (NASDAQ:ADP)

In Q4 2019, the number of bullish hedge fund positions on Automatic Data Processing Inc (NASDAQ:ADP) stock decreased by about 9% from the previous quarter (see the chart here), so a number of other hedge fund managers don't seem to agree with ADP’s growth potential. Our calculations showed that Automatic Data Processing Inc (NASDAQ:ADP) isn’t among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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Disclosure: None. This article is originally published at Insider Monkey.