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Hedge Funds Love SAP SE (SAP) Much Less Than These 3 Stocks

We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of SAP SE (NYSE:SAP) based on that data and compare it against similarly valued peers such as TOTAL S.A. (NYSE:TOT), Adobe Inc. (NASDAQ:ADBE), salesforce.com, inc. (NYSE:CRM), and BP plc (NYSE:BP).

SAP SE (NYSE:SAP) has seen an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that SAP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Singer ELLIOTT MANAGEMENT

Paul Singer of Elliott Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the recent hedge fund action encompassing SAP SE (NYSE:SAP).

How have hedgies been trading SAP SE (NYSE:SAP)?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in SAP over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of SAP SE (NYSE:SAP), with a stake worth $894.1 million reported as of the end of September. Trailing Fisher Asset Management was GQG Partners, which amassed a stake valued at $265.8 million. Holocene Advisors, Arrowstreet Capital, and Elliott 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 Unio Capital allocated the biggest weight to SAP SE (NYSE:SAP), around 5.13% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, dishing out 2.7 percent of its 13F equity portfolio to SAP.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Soroban Capital Partners, managed by Eric W. Mandelblatt and Gaurav Kapadia, assembled the biggest position in SAP SE (NYSE:SAP). Soroban Capital Partners had $4.1 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also made a $1.8 million investment in the stock during the quarter. The following funds were also among the new SAP investors: Matthew Tewksbury’s Stevens Capital Management, Michael Gelband’s ExodusPoint Capital, and Steve Cohen’s Point72 Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SAP SE (NYSE:SAP) but similarly valued. We will take a look at TOTAL S.A. (NYSE:TOT), Adobe Inc. (NASDAQ:ADBE), salesforce.com, inc. (NYSE:CRM), and BP plc (NYSE:BP). This group of stocks’ market caps are similar to SAP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TOT 17 1094583 4
ADBE 92 8325284 0
CRM 102 9433280 20
BP 36 1617309 7
Average 61.75 5117614 7.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 61.75 hedge funds with bullish positions and the average amount invested in these stocks was $5118 million. That figure was $1579 million in SAP’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 17 bullish hedge fund positions. SAP SE (NYSE:SAP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on SAP as the stock returned 15.3% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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