Automatic Data Processing (ADP): Are Hedge Funds Right About This Stock?

Automatic Data Processing (NASDAQ:ADP) was in 25 hedge funds’ portfolio at the end of the first quarter of 2013. ADP investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. There were 26 hedge funds in our database with ADP positions at the end of the previous quarter.

In the financial world, there are many methods investors can use to monitor their holdings. A duo of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the S&P 500 by a superb amount (see just how much).

Equally as integral, bullish insider trading sentiment is another way to break down the stock market universe. Obviously, there are lots of stimuli for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this method if “monkeys” know where to look (learn more here).

Keeping this in mind, we’re going to take a gander at the recent action encompassing Automatic Data Processing (NASDAQ:ADP).

How have hedgies been trading Automatic Data Processing (NASDAQ:ADP)?

In preparation for this quarter, a total of 25 of the hedge funds we track were long in this stock, a change of -4% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Jean-Marie Eveillard’s First Eagle Investment Management had the biggest position in Automatic Data Processing (NASDAQ:ADP), worth close to $214.6 million, accounting for 0.7% of its total 13F portfolio. On First Eagle Investment Management’s heels is Markel Gayner Asset Management, managed by Tom Gayner, which held a $34.1 million position; 1.3% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, David Harding’s Winton Capital Management and Daniel S. Och’s OZ Management.

Due to the fact that Automatic Data Processing (NASDAQ:ADP) has witnessed a declination in interest from the smart money, it’s easy to see that there exists a select few money managers that decided to sell off their full holdings at the end of the first quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest investment of all the hedgies we track, valued at close to $8.1 million in stock.. Daniel S. Och’s fund, OZ Management, also dropped its stock, about $4.5 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds at the end of the first quarter.

What have insiders been doing with Automatic Data Processing (NASDAQ:ADP)?

Insider buying is at its handiest when the company we’re looking at has seen transactions within the past six months. Over the last six-month time period, Automatic Data Processing (NASDAQ:ADP) has seen zero unique insiders purchasing, and 13 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Automatic Data Processing (NASDAQ:ADP). These stocks are NetSuite Inc (NYSE:N), Amdocs Limited (NYSE:DOX), Iron Mountain Incorporated (NYSE:IRM), Citrix Systems, Inc. (NASDAQ:CTXS), and Cognizant Technology Solutions Corp (NASDAQ:CTSH). This group of stocks are the members of the business software & services industry and their market caps are similar to ADP’s market cap.