Arch Capital Management, an investment advisory firm, released its third-quarter 2022 investor letter. A copy of the same can be downloaded here. The decline in the portfolio’s mid/large-cap consumer internet and software stocks dragged the fund’s performance in the third quarter. Year to date, the fund declined 29.4% compared to a decline of 23.9% for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
In the third-quarter letter, Arch Capital discussed stocks like Autodesk, Inc. (NASDAQ:ADSK). Headquartered in San Rafael, California, Autodesk, Inc. (NASDAQ:ADSK) is a global software and services provider for 3D design, engineering, and entertainment. On October 27, 2022, Autodesk, Inc. (NASDAQ:ADSK) stock closed at $210.15 per share. One-month return of Autodesk, Inc. (NASDAQ:ADSK) was 10.92% and its shares lost 33.73% of their value over the last 52 weeks. Autodesk, Inc. (NASDAQ:ADSK) has a market capitalization of $45.363 billion.
Arch Capital made the following comment about Autodesk, Inc. (NASDAQ:ADSK) in its Q3 2022 investor letter:
“Let’s look at a specific example. One of our portfolio companies is Autodesk, Inc. (NASDAQ:ADSK), a construction/engineering/architecture software business with an incredible moat. Our cost basis on the stock is $230. Shares traded as high as $340 in 2021 but today are down around $200. With this declining share price, Autodesk management has been able to take the healthy free cash flow it generates and retire some of its shares outstanding at an accelerated rate.
At the beginning of 2022, Autodesk had approximately 220 million shares outstanding. Today, that number is down to around 216 million, and we expect this number to continue to drop over the next few years as the company ramps up its free cash flow generation. This reduction in share count will juice growth in free cash flow per share, which will determine what returns we get owning Autodesk over the long haul. The lower the stock drops, the faster Autodesk’s share count drops, all else equal.”
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Autodesk, Inc. (NASDAQ:ADSK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held Autodesk, Inc. (NASDAQ:ADSK) at the end of the second quarter which was 50 in the previous quarter.
We discussed Autodesk, Inc. (NASDAQ:ADSK) in another article and shared Polen Capital’s views on the company. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
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