The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Adobe Inc. (NASDAQ:ADBE) and determine whether the smart money was really smart about this stock.
Adobe Inc. (NASDAQ:ADBE) has experienced an increase in hedge fund interest in recent months. Adobe Inc. (NASDAQ:ADBE) was in 95 hedge funds’ portfolios at the end of September. The all time high for this statistic is 115. There were 89 hedge funds in our database with ADBE holdings at the end of June. Our calculations also showed that ADBE ranked #21 among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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 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. Keeping this in mind we’re going to check out the new hedge fund action encompassing Adobe Inc. (NASDAQ:ADBE).
Brad Farber of Atika Capital
Do Hedge Funds Think ADBE Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 95 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 106 hedge funds with a bullish position in ADBE a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Adobe Inc. (NASDAQ:ADBE) was held by Fisher Asset Management, which reported holding $3704.5 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $1377.9 million position. Other investors bullish on the company included Lone Pine Capital, Akre Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Center Lake Capital allocated the biggest weight to Adobe Inc. (NASDAQ:ADBE), around 11.23% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, earmarking 10.59 percent of its 13F equity portfolio to ADBE.
Now, key money managers were leading the bulls’ herd. Renaissance Technologies, assembled the largest position in Adobe Inc. (NASDAQ:ADBE). Renaissance Technologies had $593.2 million invested in the company at the end of the quarter. Mikal Patel’s Oribel Capital Management also initiated a $58.1 million position during the quarter. The following funds were also among the new ADBE investors: Jinghua Yan’s TwinBeech Capital, Mika Toikka’s AlphaCrest Capital Management, and Brad Farber’s Atika Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Adobe Inc. (NASDAQ:ADBE) but similarly valued. These stocks are Netflix, Inc. (NASDAQ:NFLX), salesforce.com, inc. (NYSE:CRM), Comcast Corporation (NASDAQ:CMCSA), Shell plc (NYSE:RDS), Exxon Mobil Corporation (NYSE:XOM), Toyota Motor Corporation (NYSE:TM), and Pfizer Inc. (NYSE:PFE). This group of stocks’ market valuations are closest to ADBE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NFLX | 106 | 14759355 | -7 |
| CRM | 119 | 14900848 | 11 |
| CMCSA | 75 | 8547154 | -9 |
| RDS | 33 | 2053904 | -5 |
| XOM | 64 | 4640444 | -4 |
| TM | 10 | 876130 | -2 |
| PFE | 74 | 2662716 | 7 |
| Average | 68.7 | 6920079 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 68.7 hedge funds with bullish positions and the average amount invested in these stocks was $6920 million. That figure was $12682 million in ADBE’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 10 bullish hedge fund positions. Adobe Inc. (NASDAQ:ADBE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADBE is 73.8. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, ADBE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ADBE were disappointed as the stock returned -7.2% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
