If You Own ADP (ADP) Stock, Should You Sell It Now?

Polen Capital Management recently released its Q2 2020 Investor Letter, a copy of which you can download here. During the second quarter of 2020, the Polen Focus Growth Model Portfolio returned 27.60% gross of fees, while the Russell 1000 Growth Index was up 27.83% and the S&P 500 Index was up 20.54%. You should check out Polen Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Polen Capital highlighted a few stocks and Automatic Data Processing Inc (NASDAQ:ADP) is one of them. Automatic Data Processing Inc (NASDAQ:ADP) is a provider of human resources management software and services. Year-to-date, Automatic Data Processing Inc (NASDAQ:ADP) stock lost 12.9% and on July 20th it had a closing price of $147.45. Here is what Polen Capital said:

“ADP was our smallest contributor in the quarter. We believe the overall stability of the business remains apparent. However, ADP’s payroll and human capital management businesses face headwinds during periods where its clients’ workers are laid off in droves, as they are now, and when interest rates decline (a significant portion of their earnings come from float income on client balances). The business has a very large percentage of recurring revenue. Still, we expect some of these headwinds and formidable competition from cloud-native peers to persist for some time.”

Countries with the Smallest Government Per Capita in the World


In Q1 2020, the number of bullish hedge fund positions on Automatic Data Processing Inc (NASDAQ:ADP) stock decreased by about 10% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with ADP’s downside potential. Our calculations showed that Automatic Data Processing Inc (NASDAQ:ADP) isn’t ranked 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 scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. 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.