In this article we will check out the progression of hedge fund sentiment towards Autodesk, Inc. (NASDAQ:ADSK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in Autodesk, Inc. (NASDAQ:ADSK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ADSK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ADSK to other stocks including NIO Inc. (NYSE:NIO), Equinix Inc. (REIT) (NASDAQ:EQIX), and Workday Inc (NASDAQ:WDAY) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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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. Keeping this in mind we’re going to go over the new hedge fund action regarding Autodesk, Inc. (NASDAQ:ADSK).
Do Hedge Funds Think ADSK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 66 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 65 hedge funds held shares or bullish call options in ADSK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, William von Mueffling’s Cantillon Capital Management has the number one position in Autodesk, Inc. (NASDAQ:ADSK), worth close to $341.8 million, amounting to 2.5% of its total 13F portfolio. Coming in second is Melvin Capital Management, managed by Gabriel Plotkin, which holds a $291 million position; 1.7% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish include Ian Simm’s Impax Asset Management, Panayotis Takis Sparaggis’s Alkeon Capital Management and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position Marlowe Partners allocated the biggest weight to Autodesk, Inc. (NASDAQ:ADSK), around 15.67% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, earmarking 6.7 percent of its 13F equity portfolio to ADSK.
Judging by the fact that Autodesk, Inc. (NASDAQ:ADSK) has experienced a decline in interest from the smart money, we can see that there is a sect of funds that decided to sell off their full holdings in the first quarter. Intriguingly, Lone Pine Capital said goodbye to the biggest stake of the 750 funds followed by Insider Monkey, worth close to $675.6 million in stock, and Mick Hellman’s HMI Capital was right behind this move, as the fund dropped about $124.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Autodesk, Inc. (NASDAQ:ADSK) but similarly valued. We will take a look at NIO Inc. (NYSE:NIO), Equinix Inc. (REIT) (NASDAQ:EQIX), Workday Inc (NASDAQ:WDAY), Global Payments Inc (NYSE:GPN), Banco Santander, S.A. (NYSE:SAN), Capital One Financial Corp. (NYSE:COF), and Twilio Inc. (NYSE:TWLO). This group of stocks’ market values are similar to ADSK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NIO | 28 | 1321170 | -6 |
| EQIX | 41 | 1546339 | -1 |
| WDAY | 69 | 5179677 | -11 |
| GPN | 62 | 4558094 | 7 |
| SAN | 15 | 490548 | 1 |
| COF | 59 | 3139814 | 3 |
| TWLO | 99 | 5812460 | 5 |
| Average | 53.3 | 3149729 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 53.3 hedge funds with bullish positions and the average amount invested in these stocks was $3150 million. That figure was $3057 million in ADSK’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 15 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 overall hedge fund sentiment score for ADSK is 64.9. 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 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately ADSK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ADSK were disappointed as the stock returned 0.1% since the end of March (through 6/11) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
