Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Valeant and SunEdison, have not done well during the last 12 months due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 mid-cap stocks (market caps between $1 billion and $10 billion) among hedge funds delivered an average return of 18% during the last four quarters. S&P 500 Index returned only 7.6% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds and billionaire investors think before doing extensive research on a stock. In this article, we take a closer look at Adobe Systems Incorporated (NASDAQ:ADBE) from the perspective of those elite funds.
Adobe Systems Incorporated (NASDAQ:ADBE) has seen a slight increase in hedge fund sentiment lately, as the stock was in 59 hedge funds’ portfolios at the end of September, compared to 58 funds a quarter earlier. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Telefonica S.A. (ADR) (NYSE:TEF), Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), and Suncor Energy Inc. (USA) (NYSE:SU) to gather more data points.
Follow Adobe Inc. (NASDAQ:ADBE)
Follow Adobe Inc. (NASDAQ:ADBE)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Oleksiy Mark/Shutterstock.com
With all of this in mind, we’re going to review the fresh action regarding Adobe Systems Incorporated (NASDAQ:ADBE).
Hedge fund activity in Adobe Systems Incorporated (NASDAQ:ADBE)
As mentioned earlier, at the end of September, 59 of the hedge funds tracked by Insider Monkey were long this stock, up by 2% over the quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Lone Pine Capital, managed by Stephen Mandel, holds the number one position in Adobe Systems Incorporated (NASDAQ:ADBE). Lone Pine Capital has a $501.2 million position in the stock, comprising 2.2% of its 13F portfolio. On Lone Pine Capital’s heels is Aaron Cowen’s Suvretta Capital Management, which holds a $244.1 million position; 7.8% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass Eric Mindich’s Eton Park Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
As aggregate interest increased, specific money managers were breaking ground themselves. Point State Capital, managed by Zach Schreiber, established the largest position in Adobe Systems Incorporated (NASDAQ:ADBE). Point State Capital had $160 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $53.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Heebner’s Capital Growth Management, Ben Gambill’s Tiger Eye Capital, and Christopher Lord’s Criterion Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Adobe Systems Incorporated (NASDAQ:ADBE) but similarly valued. These stocks are Telefonica S.A. (ADR) (NYSE:TEF), Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), Suncor Energy Inc. (USA) (NYSE:SU), and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). 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 |
|---|---|---|---|
| TEF | 5 | 7181 | -1 |
| PBR | 32 | 1030690 | 9 |
| SU | 22 | 809820 | -3 |
| TEVA | 54 | 4254824 | -1 |
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1.53 billion, which is lower than the $2.87 billion in ADBE’s case. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is the most popular stock in this table. On the other hand Telefonica S.A. (ADR) (NYSE:TEF) is the least popular one with only five investors holding shares. Compared to these stocks Adobe Systems Incorporated (NASDAQ:ADBE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
