The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Autodesk, Inc. (NASDAQ:ADSK) and see how it was affected.
Is Autodesk, Inc. (NASDAQ:ADSK) a sound investment now? Hedge funds are getting less bullish. The number of bullish hedge fund positions retreated by 13 lately. At the end of this article we will also compare ADSK to other stocks, including Philippine Long Distance Telephone (ADR) (NYSE:PHI), Tiffany & Co. (NYSE:TIF), and Grupo Financero Sntdr Mxco SAB de CV ADR (NYSE:BSMX) to get a better sense of its popularity.
To most market participants, hedge funds are seen as underperforming, old financial vehicles of years past. While there are over 8000 funds in operation at the moment, Our researchers hone in on the top tier of this group, approximately 700 funds. These money managers have their hands on the lion’s share of the smart money’s total asset base, and by monitoring their first-class investments, Insider Monkey has brought to light a number of investment strategies that have historically outpaced the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, let’s review the fresh action surrounding Autodesk, Inc. (NASDAQ:ADSK).
How have hedgies been trading Autodesk, Inc. (NASDAQ:ADSK)?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a slump of 29% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Soroban Capital Partners, managed by Eric W. Mandelblatt, holds the most valuable position in Autodesk, Inc. (NASDAQ:ADSK). The fund reportedly holds a $680.8 million stake in the company, comprising 4.9% of its 13F portfolio. The second largest stake is held by John Griffin of Blue Ridge Capital, with a $305.4 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include Ricky Sandler’s Eminence Capital, and D. E. Shaw’s D E Shaw.
Judging by the fact that Autodesk, Inc. (NASDAQ:ADSK) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds that slashed their entire stakes in the third quarter. Intriguingly, Stephen Mandel’s Lone Pine Capital sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling close to $308.4 million in stock. Israel Englander’s fund, Millennium Management, also dropped its holding, about $90.4 million worth of shares. These transactions are interesting, as total hedge fund interest dropped by 13 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Autodesk, Inc. (NASDAQ:ADSK). These stocks are Philippine Long Distance Telephone (ADR) (NYSE:PHI), Tiffany & Co. (NYSE:TIF), Grupo Financero Sntdr Mxco SAB de CV ADR (NYSE:BSMX), and Bunge Ltd (NYSE:BG). This group of stocks’ market caps resemble ADSK’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. While Tiffany & Co. (NYSE:TIF) is leading the pack with 36 positions, Philippine Long Distance Telephone (ADR) (NYSE:PHI) is the least popular one with only 7 bullish hedge fund positions. Autodesk, Inc. (NASDAQ:ADSK) is not the most popular stock in this group, but it is not far behind Tiffany & Co with 32 long positions and it has also attracted a significantly higher investment from the hedge fund family: $2.08 billion at the end of the third quarter. Taking it all into consideration, we believe further research into both ADSK and TIF is necessary to identify the most suitable candidate for a long position.