Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 2.6% in the first two months of the second quarter. Ten out of 11 industry groups in the S&P 500 Index lost value in May. The average return of a randomly picked stock in the index was even worse (-3.6%). This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 20 most popular S&P 500 stocks among hedge funds not only generated positive returns but also outperformed the index by about 3 percentage points through May 30th. In this article, we will take a look at what hedge funds think about Autodesk, Inc. (NASDAQ:ADSK).
Autodesk, Inc. (NASDAQ:ADSK) shareholders have witnessed a decrease in hedge fund interest lately. Our calculations also showed that ADSK isn’t among the 30 most popular stocks among hedge funds.
Today there are plenty of metrics stock traders use to assess stocks. A pair of the less known metrics are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite investment managers can outperform the broader indices by a healthy margin (see the details here).
Let’s review the fresh hedge fund action surrounding Autodesk, Inc. (NASDAQ:ADSK).
How are hedge funds trading Autodesk, Inc. (NASDAQ:ADSK)?
At the end of the first quarter, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ADSK over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Lone Pine Capital was the largest shareholder of Autodesk, Inc. (NASDAQ:ADSK), with a stake worth $536 million reported as of the end of March. Trailing Lone Pine Capital was Egerton Capital Limited, which amassed a stake valued at $347.3 million. Citadel Investment Group, Darsana Capital Partners, and SRS Investment Management were also very fond of the stock, giving the stock large weights in their portfolios.
Because Autodesk, Inc. (NASDAQ:ADSK) has witnessed falling interest from the smart money, logic holds that there were a few hedgies that slashed their positions entirely heading into Q3. It’s worth mentioning that Scott Ferguson’s Sachem Head Capital sold off the biggest stake of the 700 funds tracked by Insider Monkey, totaling about $165.9 million in stock. Chase Coleman’s fund, Tiger Global Management, also cut its stock, about $113 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds heading into Q3.
Let’s go over hedge fund activity in other stocks similar to Autodesk, Inc. (NASDAQ:ADSK). These stocks are Moody’s Corporation (NYSE:MCO), Eaton Corporation plc (NYSE:ETN), Worldpay, Inc. (NYSE:WP), and eBay Inc (NASDAQ:EBAY). All of these stocks’ market caps resemble ADSK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCO | 34 | 6446374 | 2 |
| ETN | 39 | 684979 | 9 |
| WP | 75 | 5218167 | 27 |
| EBAY | 48 | 3933951 | 6 |
| Average | 49 | 4070868 | 11 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49 hedge funds with bullish positions and the average amount invested in these stocks was $4071 million. That figure was $3696 million in ADSK’s case. Worldpay, Inc. (NYSE:WP) is the most popular stock in this table. On the other hand Moody’s Corporation (NYSE:MCO) is the least popular one with only 34 bullish hedge fund positions. Autodesk, Inc. (NASDAQ:ADSK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on ADSK as the stock returned 4.4% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
