Is Accenture (ACN) Stock A Buy or Sell?

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).

Is ACN stock a buy or sell? Accenture Plc (NYSE:ACN) was in 50 hedge funds’ portfolios at the end of December. The all time high for this statistic is 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ACN has seen an increase in hedge fund sentiment lately. There were 46 hedge funds in our database with ACN positions at the end of the third quarter. Our calculations also showed that ACN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 124 percentage points since March 2017 (see the details here).

Michael Hintze of CQS Cayman LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind we’re going to analyze the key hedge fund action surrounding Accenture Plc (NYSE:ACN).

Do Hedge Funds Think ACN Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ACN over the last 22 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

The largest stake in Accenture Plc (NYSE:ACN) was held by GQG Partners, which reported holding $556.8 million worth of stock at the end of December. It was followed by AQR Capital Management with a $332.5 million position. Other investors bullish on the company included Adage Capital Management, GuardCap Asset Management, and Intermede Investment Partners. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Accenture Plc (NYSE:ACN), around 4.6% of its 13F portfolio. Global Frontier Investments is also relatively very bullish on the stock, setting aside 3.81 percent of its 13F equity portfolio to ACN.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. GQG Partners, managed by Rajiv Jain, established the biggest position in Accenture Plc (NYSE:ACN). GQG Partners had $556.8 million invested in the company at the end of the quarter. Michael Hintze’s CQS Cayman LP also initiated a $14.7 million position during the quarter. The other funds with brand new ACN positions are Michael Gelband’s ExodusPoint Capital, Nicholas Bagnall’s Te Ahumairangi Investment Management, and Matthew Tewksbury’s Stevens Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Accenture Plc (NYSE:ACN) but similarly valued. We will take a look at QUALCOMM, Incorporated (NASDAQ:QCOM), T-Mobile US, Inc. (NASDAQ:TMUS), Costco Wholesale Corporation (NASDAQ:COST), BHP Group (NYSE:BHP), Novo Nordisk A/S (NYSE:NVO), Chevron Corporation (NYSE:CVX), and Eli Lilly and Company (NYSE:LLY). This group of stocks’ market valuations are closest to ACN’s market valuation.

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As you can see these stocks had an average of 56 hedge funds with bullish positions and the average amount invested in these stocks was $4020 million. That figure was $2134 million in ACN’s case. T-Mobile US, Inc. (NYSE:TMUS) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 20 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 57.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately ACN wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); ACN investors were disappointed as the stock returned 1.3% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.