Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Autodesk, Inc. (NASDAQ:ADSK) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Autodesk, Inc. (NASDAQ:ADSK) a buy, sell, or hold? The smart money is betting on the stock. The number of long hedge fund positions advanced by 16 recently. Our calculations also showed that ADSK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). ADSK was in 64 hedge funds’ portfolios at the end of December. There were 48 hedge funds in our database with ADSK positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Stephen Mandel of Lone Pine Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now let’s review the new hedge fund action regarding Autodesk, Inc. (NASDAQ:ADSK).
What does smart money think about Autodesk, Inc. (NASDAQ:ADSK)?
At Q4’s end, a total of 64 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. By comparison, 59 hedge funds held shares or bullish call options in ADSK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Lone Pine Capital has the number one position in Autodesk, Inc. (NASDAQ:ADSK), worth close to $603.3 million, accounting for 3.2% of its total 13F portfolio. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with a $302.2 million position; 0.7% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions contain Anand Desai’s Darsana Capital Partners, William von Mueffling’s Cantillon Capital Management and Karthik Sarma’s SRS Investment Management. In terms of the portfolio weights assigned to each position HMI Capital allocated the biggest weight to Autodesk, Inc. (NASDAQ:ADSK), around 12.52% of its 13F portfolio. Marlowe Partners is also relatively very bullish on the stock, setting aside 10.55 percent of its 13F equity portfolio to ADSK.
As aggregate interest increased, key money managers have been driving this bullishness. Cantillon Capital Management, managed by William von Mueffling, established the biggest position in Autodesk, Inc. (NASDAQ:ADSK). Cantillon Capital Management had $236.4 million invested in the company at the end of the quarter. Christian Leone’s Luxor Capital Group also initiated a $88.2 million position during the quarter. The following funds were also among the new ADSK investors: Christopher R. Hansen’s Valiant Capital, Sharlyn C. Heslam’s Stockbridge Partners, and Greg Poole’s Echo Street Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Autodesk, Inc. (NASDAQ:ADSK) but similarly valued. These stocks are V.F. Corporation (NYSE:VFC), Dollar General Corp. (NYSE:DG), Manulife Financial Corporation (NYSE:MFC), and FedEx Corporation (NYSE:FDX). All of these stocks’ market caps are similar to ADSK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VFC | 29 | 770788 | -7 |
| DG | 50 | 2075641 | 1 |
| MFC | 19 | 284486 | 0 |
| FDX | 45 | 1481070 | 0 |
| Average | 35.75 | 1152996 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.75 hedge funds with bullish positions and the average amount invested in these stocks was $1153 million. That figure was $3358 million in ADSK’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand Manulife Financial Corporation (NYSE:MFC) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Autodesk, Inc. (NASDAQ:ADSK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Hedge funds were also right about betting on ADSK as the stock returned 4% so far in Q1 (through March 2nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
