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Hedge Funds Aren’t Done Buying Accenture Plc (ACN)

Debasis Saha

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Accenture Plc (NYSE:ACN).

Accenture Plc (NYSE:ACN) was in 49 hedge funds' portfolios at the end of the first quarter of 2020. ACN investors should pay attention to an increase in support from the world's most elite money managers lately. There were 41 hedge funds in our database with ACN holdings at the end of the previous quarter. Our calculations also showed that ACN isn't among the 30 most popular stocks among hedge funds (click for Q1 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 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 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.

[caption id="attachment_25717" align="aligncenter" width="400"] Steven Cohen of Point72 Asset Management[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a look at the fresh hedge fund action surrounding Accenture Plc (NYSE:ACN).

How are hedge funds trading Accenture Plc (NYSE:ACN)?

At the end of the first quarter, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in ACN a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Is ACN A Good Stock To Buy?

Among these funds, AQR Capital Management held the most valuable stake in Accenture Plc (NYSE:ACN), which was worth $236.4 million at the end of the third quarter. On the second spot was GQG Partners which amassed $177.6 million worth of shares. Adage Capital Management, Praesidium Investment Management Company, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Accenture Plc (NYSE:ACN), around 8.41% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, dishing out 6.19 percent of its 13F equity portfolio to ACN.

Consequently, some big names have jumped into Accenture Plc (NYSE:ACN) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in Accenture Plc (NYSE:ACN). Millennium Management had $21.4 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $16.7 million position during the quarter. The following funds were also among the new ACN investors: Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital, Steve Cohen's Point72 Asset Management, and Ken Griffin's Citadel Investment Group.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Accenture Plc (NYSE:ACN) but similarly valued. We will take a look at Charter Communications, Inc. (NASDAQ:CHTR), International Business Machines Corp. (NYSE:IBM), Union Pacific Corporation (NYSE:UNP), and Tesla Inc. (NASDAQ:TSLA). This group of stocks' market values resemble ACN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHTR,104,9914920,39 IBM,41,902956,-9 UNP,63,3442520,-2 TSLA,61,2124859,10 Average,67.25,4096314,9.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 67.25 hedge funds with bullish positions and the average amount invested in these stocks was $4096 million. That figure was $1003 million in ACN's case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand International Business Machines Corp. (NYSE:IBM) is the least popular one with only 41 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 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 7.9% in 2020 through May 22nd but beat the market by 15.6 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 19.2% during the second quarter and outperformed the market.

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

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