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Hedge Funds Have Never Been This Bullish On Autodesk, Inc. (ADSK)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Autodesk, Inc. (NASDAQ:ADSK) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Is Autodesk, Inc. (NASDAQ:ADSK) undervalued? Investors who are in the know were becoming more confident. The number of long hedge fund bets improved by 2 recently. Autodesk, Inc. (NASDAQ:ADSK) was in 67 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics was 66 previously. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ADSK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Currently, investors are pessimistic about commercial real estate investments. So, we are checking out this contrarian play to diversify our market exposure. We go through lists like the 10 most profitable companies in America 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let’s take a look at the new hedge fund action encompassing Autodesk, Inc. (NASDAQ:ADSK).

How are hedge funds trading Autodesk, Inc. (NASDAQ:ADSK)?

At Q2’s end, a total of 67 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ADSK over the last 20 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Lone Pine Capital held the most valuable stake in Autodesk, Inc. (NASDAQ:ADSK), which was worth $500.4 million at the end of the third quarter. On the second spot was D E Shaw which amassed $324.2 million worth of shares. Cantillon Capital Management, Two Sigma Advisors, and Alkeon Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Marlowe Partners allocated the biggest weight to Autodesk, Inc. (NASDAQ:ADSK), around 17.18% of its 13F portfolio. Valiant Capital is also relatively very bullish on the stock, designating 8.02 percent of its 13F equity portfolio to ADSK.

Now, key money managers have been driving this bullishness. Praesidium Investment Management Company, managed by Kevin Oram and Peter Uddo, established the most outsized position in Autodesk, Inc. (NASDAQ:ADSK). Praesidium Investment Management Company had $58.4 million invested in the company at the end of the quarter. John Brennan’s Sirios Capital Management also initiated a $15.3 million position during the quarter. The other funds with new positions in the stock are Mikal Patel’s Oribel Capital Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Zach Schreiber’s Point State Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Autodesk, Inc. (NASDAQ:ADSK) but similarly valued. We will take a look at Brookfield Asset Management Inc. (NYSE:BAM), Moody’s Corporation (NYSE:MCO), Humana Inc (NYSE:HUM), Northrop Grumman Corporation (NYSE:NOC), Global Payments Inc (NYSE:GPN), Sea Limited (NYSE:SE), and Truist Financial Corporation (NYSE:TFC). This group of stocks’ market values match ADSK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BAM 33 1001293 -4
MCO 61 10770558 11
HUM 73 4697967 3
NOC 47 990004 2
GPN 66 3311740 -1
SE 82 6358325 6
TFC 33 287639 -1
Average 56.4 3916789 2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 56.4 hedge funds with bullish positions and the average amount invested in these stocks was $3917 million. That figure was $3015 million in ADSK’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand Brookfield Asset Management Inc. (NYSE:BAM) is the least popular one with only 33 bullish hedge fund positions. Autodesk, Inc. (NASDAQ:ADSK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADSK is 71.7. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but beat the market by 20.6 percentage points. Unfortunately ADSK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ADSK were disappointed as the stock returned 5.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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