An Accenture Plc (ACN) Insider’s Family LP Bought 20,000 Shares

A family limited partnership connected to Accenture Plc (NYSE:ACN) officer Stephen Rohleder purchased 20,000 shares of the company’s stock on July 2nd at an average price of about $72 per share. Rohleder also owns a little over 30,000 shares of Accenture Plc (NYSE:ACN) directly according to the Form 4. Studies generally show that stocks bought by insiders exhibit a small outperformance effect (read our analysis of studies on insider trading). We would explain this finding through the fact that insiders already have an economic connection to the company, and so should be reluctant to buy shares (and therefore increase their company-specific risk) unless they are particularly confident in the stock price.

The third quarter of Accenture Plc (NYSE:ACN)’s fiscal year ended in May 2013, with the company recording little change in revenues either for that quarter or for the first nine months of the FY compared to the appropriate year-ago period. Earnings have been up at a high rate in percentage terms- 18% in its most recent quarter compared to the third quarter of the last fiscal year- but in taking a closer look at the 10-Q that seems to have been primarily due to the combination of a lower effective tax rate and net benefits from corporate reorganization, which would not be sustainable sources of growth. The current market capitalization of $48 billion results in a trailing earnings multiple of 17, a valuation at which we’d need to see a way for net income to increase going forward; aside from these two factors, growth prospects on the bottom line seem limited particularly with revenue being slack.

In addition to insider trading activity, we track 13F filings from hundreds of hedge funds and other notable investors. We primarily use this information to help us develop investing strategies (for example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year) but can also use our database to track interest in individual stocks. We can see that Cliff Asness’s AQR Capital Management initiated a position of 1.3 million shares in Accenture during the first quarter of 2013 (see more of Asness’s stock picks). Lansdowne Partners, a hedge fund managed by Steve Heinz and Sir Paul Ruddock, had Accenture Plc (NYSE:ACN) as one of its largest positions as of the end of March (find Lansdowne’s favorite stocks).