Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Adobe Inc. (NASDAQ:ADBE) in this article.
Adobe Inc. (NASDAQ:ADBE) shareholders have witnessed an increase in enthusiasm from smart money lately. Adobe Inc. (NASDAQ:ADBE) was in 114 hedge funds’ portfolios at the end of December. The all time high for this statistic is 115. There were 106 hedge funds in our database with ADBE holdings at the end of September. Our calculations also showed that ADBE ranked 16th among the 30 most popular stocks among hedge funds (click for Q4 rankings).
To most shareholders, hedge funds are perceived as unimportant, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, Our researchers look at the upper echelon of this group, about 850 funds. These investment experts manage the majority of the smart money’s total capital, and by paying attention to their highest performing investments, Insider Monkey has figured out various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 11 short targets in our latest quarterly update .
Charles Akre of Akre Capital Management
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 view the key hedge fund action surrounding Adobe Inc. (NASDAQ:ADBE).
Do Hedge Funds Think ADBE Is A Good Stock To Buy Now?
At Q4’s end, a total of 114 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. By comparison, 106 hedge funds held shares or bullish call options in ADBE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Adobe Inc. (NASDAQ:ADBE), with a stake worth $2909.8 million reported as of the end of December. Trailing Fisher Asset Management was Lone Pine Capital, which amassed a stake valued at $1010.6 million. GQG Partners, Arrowstreet Capital, and Akre 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 Keywise Capital Management allocated the biggest weight to Adobe Inc. (NASDAQ:ADBE), around 13.72% of its 13F portfolio. Center Lake Capital is also relatively very bullish on the stock, designating 9.5 percent of its 13F equity portfolio to ADBE.
Consequently, key money managers were leading the bulls’ herd. Point State Capital, managed by Zach Schreiber, created the most outsized position in Adobe Inc. (NASDAQ:ADBE). Point State Capital had $77.6 million invested in the company at the end of the quarter. Michael Sidhom’s Immersion Capital also initiated a $37 million position during the quarter. The following funds were also among the new ADBE investors: Brennan Diaz’s Fernbridge Capital Management, Steve Cohen’s Point72 Asset Management, and Tor Minesuk’s Mondrian Capital.
Let’s now review hedge fund activity in other stocks similar to Adobe Inc. (NASDAQ:ADBE). These stocks are Paypal Holdings Inc (NASDAQ:PYPL), salesforce.com, inc. (NYSE:CRM), The Walt Disney Company (NYSE:DIS), Netflix, Inc. (NASDAQ:NFLX), Intel Corporation (NASDAQ:INTC), The Coca-Cola Company (NYSE:KO), and Comcast Corporation (NASDAQ:CMCSA). All of these stocks’ market caps are closest to ADBE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PYPL | 147 | 15961182 | -3 |
| CRM | 97 | 10576035 | -9 |
| DIS | 144 | 16417240 | 32 |
| NFLX | 116 | 15633343 | 12 |
| INTC | 72 | 5578824 | 6 |
| KO | 62 | 24683372 | 2 |
| CMCSA | 84 | 8831767 | 2 |
| Average | 103.1 | 13954538 | 6 |
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As you can see these stocks had an average of 103.1 hedge funds with bullish positions and the average amount invested in these stocks was $13955 million. That figure was $11928 million in ADBE’s case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand The Coca-Cola Company (NYSE:KO) is the least popular one with only 62 bullish hedge fund positions. Adobe Inc. (NASDAQ:ADBE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADBE is 75.3. 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 positive signal but 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 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately ADBE wasn’t nearly as successful as these 30 stocks and hedge funds that were betting on ADBE were disappointed as the stock returned -11.2% since the end of December (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
