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This Hedge Fund Sells Automatic Data Processing (ADP) Amid Strong Competition, COVID-19 Impact

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Jose Karlo Mari Tottoc
·3 min read
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Polen Capital Management, a value-driven, concentrated, long-term investment management firm, published its ‘Polen Focus Growth’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 10.15% was recorded by the fund for the Q4 of 2020, just an inch below both its S&P 500 benchmark that delivered a 12.15% return, and Russell 1000 index that returned 11.39%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Polen Focus Growth in their Q4 Investor Letter said that Automatic Data Processing, Inc. (NASDAQ: ADP) was one of the top detractors for the fund during the fourth quarter of 2020. Automatic Data Processing, Inc. is a cloud-based human capital management solutions provider company that currently has a $72.9 billion market cap. For the past 3 months, ADP delivered a 4.82% return and settled at $170.56 per share at the closing of February 4th.

Here is what Polen Focus Growth has to say about Automatic Data Processing, Inc. in their investor letter:

"For ADP, we detail our decision to sell our position in the third quarter letter. The very high levels of unemployment in the U.S. and extremely low interest rates have negatively impacted the business in the short term. At the same time, increasing competitive intensity in the human capital management industry is creating headwinds."

Office Laptop Working Websurfing pexels
Office Laptop Working Websurfing pexels

Pixabay/Public Domain

Last December 2020, we published an article telling that Automatic Data Processing, Inc. (NASDAQ: ADP) was in 42 hedge fund portfolios. Its all time high statistics is 56. ADP delivered a -5.38% return in the past 12 months.

Our calculations show that Automatic Data Processing, Inc. (NASDAQ: ADP) ranks top 2 in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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

https://youtu.be/OgBhPDmWMtI

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

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