After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards SAP SE (NYSE:SAP).
Is SAP SE (NYSE:SAP) the right pick for your portfolio? Investors who are in the know were in a pessimistic mood. The number of long hedge fund positions decreased by 2 lately. SAP SE (NYSE:SAP) was in 17 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 20. Our calculations also showed that SAP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 19 hedge funds in our database with SAP positions at the end of the first quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. With all of this in mind we’re going to take a look at the new hedge fund action encompassing SAP SE (NYSE:SAP).
Do Hedge Funds Think SAP Is A Good Stock To Buy Now?
At second quarter’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in SAP a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in SAP SE (NYSE:SAP), worth close to $1.2451 billion, accounting for 0.8% of its total 13F portfolio. On Fisher Asset Management’s heels is Windacre Partnership, managed by Snehal Amin, which holds a $280.1 million position; 6.2% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism encompass Renaissance Technologies, and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Windacre Partnership allocated the biggest weight to SAP SE (NYSE:SAP), around 6.19% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, earmarking 0.78 percent of its 13F equity portfolio to SAP.
Seeing as SAP SE (NYSE:SAP) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of funds that slashed their full holdings heading into Q3. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest position of the 750 funds monitored by Insider Monkey, totaling an estimated $77.1 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $3.7 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SAP SE (NYSE:SAP) but similarly valued. We will take a look at QUALCOMM, Incorporated (NASDAQ:QCOM), Pinduoduo Inc. (NASDAQ:PDD), AstraZeneca plc (NYSE:AZN), Philip Morris International Inc. (NYSE:PM), Royal Dutch Shell plc (NYSE:RDS), The Unilever Group (NYSE:UL), and Honeywell International Inc. (NYSE:HON). This group of stocks’ market values are similar to SAP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QCOM | 72 | 4047519 | -1 |
| PDD | 49 | 5276960 | -7 |
| AZN | 37 | 2772286 | 3 |
| PM | 46 | 5973614 | -2 |
| RDS | 38 | 2444791 | 2 |
| UL | 19 | 844216 | -1 |
| HON | 57 | 1834599 | 1 |
| Average | 45.4 | 3313426 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.4 hedge funds with bullish positions and the average amount invested in these stocks was $3313 million. That figure was $1604 million in SAP’s case. QUALCOMM, Incorporated (NASDAQ:QCOM) is the most popular stock in this table. On the other hand The Unilever Group (NYSE:UL) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks SAP SE (NYSE:SAP) is even less popular than UL. Our overall hedge fund sentiment score for SAP is 28.5. 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. Hedge funds dodged a bullet by taking a bearish stance towards SAP. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th but managed to beat the market again by 3.1 percentage points. Unfortunately SAP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); SAP investors were disappointed as the stock returned 6.5% since the end of the second quarter (through 11/5) 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 most of these stocks already outperformed the market since 2019.
Follow Sap Se (NYSE:SAP)
Follow Sap Se (NYSE:SAP)
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Disclosure: None. This article was originally published at Insider Monkey.
