Third Point Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A portfolio return of -5.3% was delivered by the flagship Offshore Fund for the final quarter of 2021, bringing its year-to-date returns to 22.7%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Third Point Management, in its Q4 2021 investor letter, mentioned Accenture plc (NYSE: ACN) and discussed its stance on the firm. Accenture plc is a Dublin, Ireland-based multinational professional services company with a $202.9 billion market capitalization. ACN delivered a -22.52% return since the beginning of the year, while its 12-month returns are up by 26.30%. The stock closed at $321.18 per share on February 21, 2022.
Here is what fourth Point Management has to say about Accenture plc in its Q4 2021 investor letter:
“Accenture, the gold standard in IT Services, is a high-quality compounder at the nexus of two post-Covid megatrends: the acceleration of digitization across industries globally and an emerging IT talent war. It specializes in the highest value work and is the leader in digital and cloud transformations. For the past two decades, Accenture has compounded free cashflow per share at 12% per year on a fully unlevered basis. It has been able to sustain these high rates of compounding due to rising IT spend, rising IT outsourcing, and consistent market share gains. Accenture is positioned to benefit from skyrocketing demand for IT services, partially due to the coronavirus pandemic, which dramatically accelerated the need for digitization across industries. As companies urgently undertake large scale digital and cloud transformations, tech laggards with historically poor IT hiring capabilities must digitize to survive. We believe that as IT services demand accelerates and shifts towards digital transformation projects (where Accenture is particularly well-positioned), Accenture’s market share gains will sustainably accelerate.
Accenture’s growth will also be supported by an increasingly constrained supply of IT talent. Remote work is decoupling employment from location, globalizing the IT talent pool and enabling leading technology companies to compete for talent outside their home markets much more proactively than in the past. That dynamic is making it increasingly difficult for companies in other industries to hire IT professionals at a time of their greatest need. This IT talent “supply shock” is a tremendous opportunity for Accenture, whose best-in-class brand and talent recruiting give the company a growing supply-side advantage which we believe should translate into further market share gains going forward.
Taken together, we believe these concurrent demand and supply shocks should enable Accenture to sustainably accelerate its growth algorithm going forward. We expect revenue growth to accelerate from high single-digit historical levels to mid-teens in the coming years, while free cashflow per share growth accelerates from low-teens to roughly 20% or better. Accenture’s recent guidance for a material acceleration in fiscal year 2022 is the first evidence of this dynamic unfolding. We expect elevated growth to persist for years to come, and are excited to be long-term owners of the stock.”
Our calculations show that Accenture plc (NYSE: ACN) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. ACN was in 50 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 56 funds in the previous quarter. Accenture plc (NYSE: ACN) delivered a -13.15% return in the past 3 months.
In November 2021, we also shared another hedge fund’s views on ACN in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
