We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Accenture Plc (NYSE:ACN).
Accenture Plc (NYSE:ACN) has experienced an increase in hedge fund sentiment recently. Accenture Plc (NYSE:ACN) was in 50 hedge funds' portfolios at the end of December. The all time high for this statistic was previously 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ACN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
To most shareholders, hedge funds are seen as underperforming, old investment tools of the past. While there are greater than 8000 funds with their doors open today, Our researchers choose to focus on the bigwigs of this group, about 850 funds. It is estimated that this group of investors orchestrate most of the smart money's total capital, and by monitoring their matchless stock picks, Insider Monkey has uncovered several investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .
Michael Hintze of CQS Cayman LP
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to view the recent hedge fund action encompassing Accenture Plc (NYSE:ACN).
Do Hedge Funds Think ACN Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ACN over the last 22 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, GQG Partners was the largest shareholder of Accenture Plc (NYSE:ACN), with a stake worth $556.8 million reported as of the end of December. Trailing GQG Partners was AQR Capital Management, which amassed a stake valued at $332.5 million. Adage Capital Management, GuardCap Asset Management, and Intermede Investment Partners 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 4.6% of its 13F portfolio. Global Frontier Investments is also relatively very bullish on the stock, setting aside 3.81 percent of its 13F equity portfolio to ACN.
Now, some big names have jumped into Accenture Plc (NYSE:ACN) headfirst. GQG Partners, managed by Rajiv Jain, established the most outsized position in Accenture Plc (NYSE:ACN). GQG Partners had $556.8 million invested in the company at the end of the quarter. Michael Hintze's CQS Cayman LP also made a $14.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital, Nicholas Bagnall's Te Ahumairangi Investment Management, and Matthew Tewksbury's Stevens Capital Management.
Let's check out 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 QUALCOMM, Incorporated (NASDAQ:QCOM), T-Mobile US, Inc. (NASDAQ:TMUS), Costco Wholesale Corporation (NASDAQ:COST), BHP Group (NYSE:BHP), Novo Nordisk A/S (NYSE:NVO), Chevron Corporation (NYSE:CVX), and Eli Lilly and Company (NYSE:LLY). All of these stocks' market caps are similar to ACN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QCOM,85,2727547,-2 TMUS,103,9117019,9 COST,61,3613961,-12 BHP,20,1099946,2 NVO,23,3161939,1 CVX,50,5390278,7 LLY,50,3028302,-10 Average,56,4019856,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 56 hedge funds with bullish positions and the average amount invested in these stocks was $4020 million. That figure was $2134 million in ACN's case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 20 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 57.1. 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 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and surpassed the market again by 1.6 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 11.7% since the end of December (through 4/30) 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.