Abdiel Capital Advisors is an activist hedge fund and the second best performing hedge fund in our database; it was co-founded by Colin Moran, its current managing partner, who holds a B.A. in History and Economics from Duke University, an M.St. in Modern History from Oxford University and a J.D. from Stanford Law School. Before starting Abdiel Capital Advisors in 2006 he gained experience in investment strategies working as an investment banking associate at Goldman Sachs, and later on as a partner at Chieftain Capital. Colin Moran owns 50-75% of the fund, and Geoffrey Gentile, a partner at Abdiel Capital Advisors owns 25-50% of it.
The fund’s investment philosophy is focused on publicly traded companies that will bring market share over a longer course of time. According to their statement, the fund ‘has widely outperformed the market since its 2006 inception’. We couldn’t find any data about their recent returns, however we know that they outperformed the market by high single digits in their earlier years. In 2009, Abdiel Capital Advisors reported returns of 7% per annum since its inception vs. –1% for the S&P 500 for the same period. As of June 2018, Abdiel Capital Advisors holds almost $1.1 billion in regulatory assets under management.
According to their latest 13F filing with the Securities and Exchange Commission for the second quarter 2018, their largest investment is in Axon Enterprise, Inc. (AAXN), holding 4,292,361 shares worth around $271.8 million, making it up for 22.7% of all their investments. Furthermore, there has been an increase in the value of fund’s 13F holdings from $840 million at the end of the first quarter to $1.2 billion at the end of the second quarter.
The investment changes the fund has made count three new additions to its portfolio and one sold out stock. Abdiel Capital Advisors has lost faith in Sturm Ruger & Company, Inc. (RGR), selling its entire position that was worth $15.75 million and counted 300,000 shares. Companies that have attracted the fund’s attention are Cannae Holdings, Inc. (CNNE) in which the fund built a $66.05 million worth position, Ceridian HCM Holding Inc. (CDAY) in which the fund’s position is valued at $13.28 million; and, the smallest new investment of Abdiel Capital Advisors was in ZUORA INC (ZUO), with the fund acquiring 400,000 shares, worth around $10.88 million at the end of the second quarter.
Abdiel Capital was the second best performing hedge fund during the second quarter. Their stock picks returned 29% during Q2 and a cumulative of 82% in the latest 4 quarters. Insider Monkey’s flagship strategy identifies the best performing 100 hedge funds at the end of each quarter (Abdiel Capital is one of these hedge funds) and invests in their consensus stock picks. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market. Since its inception in May 2014, our flagship strategy generated a cumulative return of 121% vs. a cumulative gain of 66.6% for the S&P 500 ETF (SPY) (see the details here).
Let’s see how many bullish positions in these Abdiel Capital Advisors’ picks had hedge funds that Insider Monkey follows. Starting with the Sturm Ruger & Company (RGR), the company which Abdiel Capital Advisors’ decided to remove from its portfolio. There has been an increase in the number of investors bullish on the stock, with 17 positions at the end of the second quarter, versus 12 positions at the end of the first quarter. Hence, with hedge funds slowly becoming more bullish on this company, it should be asked whether Abdiel Capital Advisors should have said goodbye to its position.
As for the new company in which the fund invested the most, Cannae Holdings, Inc. (CNNE), it has also attracted more investors. There are currently 25 hedge funds with positions in the stock, which is 4 more than the previous quarter’s figure. Furthermore, Cannae Holdings, Inc.(CNNE) seems to be slightly more popular among hedge funds than other companies with similar market caps, so maybe this was a smart investment move for Abdiel Capital Advisors. We are going to provide a detailed write-up of this position in the September issue of our monthly newsletter.
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