Hedge Funds Aren’t Crazy About Accenture Plc (ACN) Anymore

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Accenture Plc (NYSE:ACN).

Accenture Plc (NYSE:ACN) was in 37 hedge funds’ portfolios at the end of the third quarter of 2016. ACN investors should pay attention to a decrease in enthusiasm from smart money in recent months. There were 38 hedge funds in our database with ACN holdings at the end of the previous quarter. 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 NIKE, Inc. (NYSE:NKE), SAP SE (ADR) (NYSE:SAP), and Allergan, Inc. (NYSE:AGN) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Keeping this in mind, let’s take a look at the fresh action surrounding Accenture Plc (NYSE:ACN).

What have hedge funds been doing with Accenture Plc (NYSE:ACN)?

At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a decrease of 3% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, 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, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Accenture Plc (NYSE:ACN). AQR Capital Management has a $146.8 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $122 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions encompass Principal Global Investors’s Columbus Circle Investors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Due to the fact that Accenture Plc (NYSE:ACN) has faced declining sentiment from hedge fund managers, we can see that there exists a select few hedgies that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dumped the largest investment of all the hedgies tracked by Insider Monkey, comprising an estimated $29 million in stock, and George Hall’s Clinton Group was right behind this move, as the fund said goodbye to about $13.1 million worth of stock. These moves are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Accenture Plc (NYSE:ACN). We will take a look at NIKE, Inc. (NYSE:NKE), SAP SE (ADR) (NYSE:SAP), Allergan, Inc. (NYSE:AGN), and Walgreens Boots Alliance Inc (NASDAQ:WBA). This group of stocks’ market caps are similar to ACN’s market cap.

As you can see these stocks had an average of 59 hedge funds with bullish positions and the average amount invested in these stocks was $4.57 billion. That figure was $757 million in ACN’s case. Allergan, Inc. (NYSE:AGN) is the most popular stock in this table. On the other hand SAP SE (ADR) (NYSE:SAP) is the least popular one with only 7 bullish hedge fund positions. Accenture Plc (NYSE:ACN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AGN might be a better candidate to consider a long position.