Polen Capital: “We Believe SAP is a Durable Business”

Polen Capital, an investment management firm, published its “Polen Global Growth Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. During the first quarter of 2022, the Polen Global Growth Composite Portfolio (the “Portfolio) was down -13.30% and -13.54%, gross and net of fees, versus a decline of -5.35% for the MSCI ACWI (the “Index”).  Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022. 

In its Q1 2022 investor letter, Polen Global Growth Fund mentioned  SAP SE (NYSE:SAP) and explained its insights for the company. Founded in 1972, SAP SE (NYSE:SAP) is a Walldorf, Germany-based multinational software corporation with a $120.3 billion market capitalization. SAP SE (NYSE:SAP) delivered a -27.21% return since the beginning of the year, while its 12-month returns are down by -27.13%. The stock closed at $101.99 per share on June 07, 2022.

Here is what Polen Global Growth Fund has to say about SAP SE (NYSE:SAP) in its Q1 2022 investor letter:

“In our opinion, SAP is demonstrating that their cloud transition and RISE with SAP strategy are working. We added to our position upon evidence that CEO Christian Klein’s strategy is bearing fruit, and the stock trading down to an attractive valuation during the quarter. The strategy and sell-off are connected, and we believe it provided an opportunity for long- term shareholders. The company recently reported weak 2022 margin and FCF guidance. This was expected if cloud growth accelerated – which it has. Current cloud backlog has accelerated to a mid-20% growth rate, and the S/4 HANA Cloud Backlog and Cloud Sales have accelerated as well. Cloud, which tends to be a very sticky business with high recurring revenue, is now a >$10bn business and represents roughly 40% of sales.

Our research shows this should only increase over the next five years. If management continues to successfully execute its strategy, the transition should create a mechanical lift to margins and greater levels of FCF. We believe SAP is a durable business led by capable management that is poised to deliver high-quality mid-teens earnings growth over the next five years.”


Our calculations show that SAP SE (NYSE:SAP) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. SAP SE (NYSE:SAP) was in 19 hedge fund portfolios at the end of the first quarter of 2022, compared to 14 funds in the previous quarter. SAP SE (NYSE:SAP) delivered a -8.82% return in the past 3 months.

In August 2021, we also shared another hedge fund’s views on SAP SE (NYSE:SAP) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

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