In this article we are going to use hedge fund sentiment as a tool and determine whether Accenture Plc (NYSE:ACN) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is ACN a good stock to buy? Accenture Plc (NYSE:ACN) was in 48 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 50. ACN has seen a decrease in hedge fund sentiment of late. There were 50 hedge funds in our database with ACN holdings at the end of December. Our calculations also showed that ACN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are numerous formulas market participants have at their disposal to size up their holdings. Two of the less known formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outperform their index-focused peers by a solid margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. Keeping this in mind we’re going to take a gander at the fresh hedge fund action regarding Accenture Plc (NYSE:ACN).
Do Hedge Funds Think ACN Is A Good Stock To Buy Now?
At the end of March, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. By comparison, 49 hedge funds held shares or bullish call options in ACN a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, GQG Partners was the largest shareholder of Accenture Plc (NYSE:ACN), with a stake worth $573.6 million reported as of the end of March. Trailing GQG Partners was AQR Capital Management, which amassed a stake valued at $354 million. GuardCap Asset Management, Adage Capital Management, and D E Shaw 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 GuardCap Asset Management allocated the biggest weight to Accenture Plc (NYSE:ACN), around 4.77% of its 13F portfolio. Force Hill Capital Management is also relatively very bullish on the stock, earmarking 4.36 percent of its 13F equity portfolio to ACN.
Judging by the fact that Accenture Plc (NYSE:ACN) has faced bearish sentiment from the smart money, it’s safe to say that there were a few hedge funds who were dropping their positions entirely in the first quarter. Interestingly, Renaissance Technologies cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, worth about $100.1 million in stock. Robert Pohly’s fund, Samlyn Capital, also dumped its stock, about $67 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in the first quarter.
Let’s check out hedge fund activity in other stocks similar to Accenture Plc (NYSE:ACN). We will take a look at Thermo Fisher Scientific Inc. (NYSE:TMO), Eli Lilly and Company (NYSE:LLY), Texas Instruments Incorporated (NASDAQ:TXN), BHP Group (NYSE:BHP), McDonald’s Corporation (NYSE:MCD), Pinduoduo Inc. (NASDAQ:PDD), and Wells Fargo & Company (NYSE:WFC). This group of stocks’ market values are similar to ACN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TMO | 79 | 6254066 | -10 |
| LLY | 55 | 2522416 | 5 |
| TXN | 42 | 2532768 | -14 |
| BHP | 18 | 873686 | -2 |
| MCD | 67 | 3783829 | 5 |
| PDD | 56 | 6293871 | 2 |
| WFC | 96 | 7454581 | -3 |
| Average | 59 | 4245031 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 59 hedge funds with bullish positions and the average amount invested in these stocks was $4245 million. That figure was $2351 million in ACN’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 18 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 51. 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 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately ACN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ACN investors were disappointed as the stock returned 2.1% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
