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Adobe (ADBE) Has Risen 73% in Last One Year, Outperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of RiverPark Advisors top stock picks. RiverPark Advisors, an investment management firm, is bullish on Adobe Inc. (NASDAQ:ADBE) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Adobe Inc. (NASDAQ:ADBE) stock. Adobe Inc. (NASDAQ:ADBE) is a computer software company.

In July 2019, RiverPark Advisors had released its Q2 2019 investor letter. The investment firm said that it is holding Adobe Inc. (NASDAQ:ADBE) stock since many years. Adobe Inc. (NASDAQ:ADBE) stock has posted a return of 73.2% in the trailing one year period, outperforming the S&P 500 Index which returned 10.2% in the same period. This suggests that the investment firm was right in its decision. On a year-to-date basis, Adobe Inc. (NASDAQ:ADBE) stock has risen by 45.5%.

In Q2 2019 investor letter, RiverPark Advisors said the Large Growth fund posted a return of 7.4% in the second quarter of 2019, outperforming fund’s benchmark the S&P 500 Index which returned 4.3% in the same period. Let’s take a look at comments made by RiverPark Advisors about Adobe Inc. (NASDAQ:ADBE) stock in the Q2 2019 investor letter.

“Adobe, which we have owned now for several years,3 is a prime example of this phenomenon of underestimating future earnings leading to a material differential in valuation. From 2015 to 2018, Adobe regularly beat quarterly earnings by an average 11% each quarter.4 In November 2015, Wall Street was quite bullish on the stock and forecast 44% annual EPS growth for the next three years – this led to a consensus estimate for Adobe’s 2018 EPS of “only” $3.57.5 Investors were seemingly paying 48x the next year’s EPS estimate6 (the S&P 500 multiple was 18x) and 25x 2018’s EPS making the stock look quite expensive. However, given the secular tailwind of marketing and cloud services driving the company’s growth, Adobe actually grew earnings 63% per year over that time (nearly 50% faster per year than the Street had projected), resulting in EPS in 2018 of $5.20. As a result, in November 2015, ADBE shares traded at only 17x the company’s actual 2018 EPS (more than 30% lower than what the Street had estimated).”

Last month, we published an article revealing that Qualivian Investment Partners is bullish on Adobe Inc. (NASDAQ:ADBE) stock. The investment firm believes that the company’s market position would remain strong going forward.

In Q2 2020, the number of bullish hedge fund positions on Adobe Inc. (NASDAQ:ADBE) stock decreased by about 10% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Adobe’s growth potential. Our calculations showed that Adobe Inc. (NASDAQ:ADBE) is ranked #19 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.