How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Accenture Plc (NYSE:ACN) and determine whether hedge funds had an edge regarding this stock.
Accenture Plc (NYSE:ACN) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. Accenture Plc (NYSE:ACN) was in 56 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 52. 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 Q3 rankings).
Cliff Asness of AQR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind we’re going to check out the fresh hedge fund action encompassing Accenture Plc (NYSE:ACN).
Do Hedge Funds Think ACN Is A Good Stock To Buy Now?
At third quarter’s end, a total of 56 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 46 hedge funds with a bullish position in ACN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Ako Capital was the largest shareholder of Accenture Plc (NYSE:ACN), with a stake worth $718.8 million reported as of the end of September. Trailing Ako Capital was GQG Partners, which amassed a stake valued at $631.8 million. Arrowstreet Capital, GuardCap Asset Management, and AQR Capital Management 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 Ako Capital allocated the biggest weight to Accenture Plc (NYSE:ACN), around 7.45% of its 13F portfolio. GuardCap Asset Management is also relatively very bullish on the stock, setting aside 5.25 percent of its 13F equity portfolio to ACN.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Ako Capital, managed by Nicolai Tangen, assembled the most outsized position in Accenture Plc (NYSE:ACN). Ako Capital had $718.8 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker’s Woodline Partners also made a $36.8 million investment in the stock during the quarter. The other funds with brand new ACN positions are Steve Cohen’s Point72 Asset Management, Ray Dalio’s Bridgewater Associates, and Kevin McCarthy’s Breakline Capital.
Let’s now review hedge fund activity in other stocks similar to Accenture Plc (NYSE:ACN). We will take a look at Broadcom Inc (NASDAQ:AVGO), Costco Wholesale Corporation (NASDAQ:COST), Chevron Corporation (NYSE:CVX), AT&T Inc. (NYSE:T), AbbVie Inc (NYSE:ABBV), Wells Fargo & Company (NYSE:WFC), and Merck & Co., Inc. (NYSE:MRK). This group of stocks’ market caps match ACN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVGO | 50 | 2706386 | 3 |
| COST | 55 | 4393346 | 1 |
| CVX | 51 | 4442202 | 1 |
| T | 66 | 3212098 | -2 |
| ABBV | 81 | 4140050 | -1 |
| WFC | 88 | 6188279 | -6 |
| MRK | 77 | 4550626 | -2 |
| Average | 66.9 | 4233284 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 66.9 hedge funds with bullish positions and the average amount invested in these stocks was $4233 million. That figure was $4461 million in ACN’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Broadcom Inc (NASDAQ:AVGO) is the least popular one with only 50 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 46.9. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on ACN as the stock returned 11.1% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Accenture Plc (NYSE:ACN)
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Disclosure: None. This article was originally published at Insider Monkey.
