▶ Full Post Text
I archive quarterly fund letters (about 2,600 now) and pull out every company each one mentions, with the exact sentence attached. Ten letters from eight managers report a position in Accenture. One manager initiated, one added, four hold, and four exited. Below is each position and the comment that goes with it.
BOUGHT
Harris Associates initiated the position in its March letter:
>"We initiated the following position(s) during the period: Accenture is a global leader in consulting and outsourced IT services. The company benefits from unmatched scale, being nearly three times as large as the next three public IT services companies combined. We think it is well-positioned for future growth as it is deeply embedded in large enterprises' workflows, with its top 300 clients spending over $100 million annually. Furthermore, we believe it is poised to capitalize on the ongoing enterprise cloud transition and the secular growth in enterprise technology spending. Despite these strong fundamentals, the stock is trading at its lowest P/E multiple since 2015 due to what we view as misguided AI disruption fears, creating the opportunity to purchase shares at a sizable discount to our estimate of intrinsic value."
In its June letter, after the shares fell, the same manager restated the case:
>"Accenture was a detractor during the quarter. Shares of the U.S.-listed IT services company fell sharply after fiscal third-quarter results showed weaker than expected bookings and a modestly below consensus near-term revenue outlook. The market is treating these results as proof that AI is disrupting Accenture's business model. We believe the weakness is due to transitory rather than structural factors. As enterprises begin to execute larger-scale transformation projects tied to AI, we expect Accenture's revenue growth to accelerate. Accenture is deeply embedded in enterprise IT roadmaps, as 195 of its top 200 clients have worked with the firm for over a decade and most of those clients spend more than $100M annually. Shares now trade for less than 10x free cash flow and at the lowest P/E multiple in Accenture's 25-year history as a public company. We see the shares as significantly undervalued at the current price."
Distillate Capital added to its position in June:
>"Accenture is a current example of a high-quality company that is trading at a compelling valuation that offers potential significant upside with notable margin of safety characteristics proving downside protection. The stock has plummeted due to AI disruption fears despite maintaining solid fundamentals, zero debt, and healthy growth forecasts. Historically valued at \~20 times FCF, the stock now trades at a steep discount of roughly 7.3x. \[...\] The situation is reminiscent of Microsoft in 2009, or Apple in 2015, when sentiment was extraordinarily negative yet fundamentals were strong. Time will tell how disruptive or accretive AI might be to Accenture's business, but the skew currently, in our view, is one where investors may be richly rewarded for taking the contrarian view. We believe Accenture looks extremely attractive."
HELD
Baillie Gifford holds the shares. The same passage appears in its Global Durable Growth and Global Income Growth letters:
>"Let's be clear, our portfolio is not anti-AI. We are believers in this transformative technology. But we have some caution on the speed and smoothness of its rollout. In sectors beyond technology, where return on investment remains elusive, adoption rates are likely to be slower. Companies are wrestling with heavy regulation, deep process re-engineering and data governance requirements. This could be a long process and companies will need help, which is why we are sticking by holdings like Accenture and Wolters Kluwer, even as the market writes them off as AI losers. We believe it is right to give our clients healthy exposure to this exciting theme - we have around 14 percent of the portfolio invested in companies associated with the infrastructure buildout - but it's prudent to balance this with a broader set of growth engines the index may overlook."
Harding Loevner holds the shares. It lists the company among its detractors in its Global Equity and Global Developed Markets letters:
>"Beyond chips, IT services holding Accenture reported a disappointing 3% drop in new bookings year over year, a leading indicator of future revenue, lending credence to concern that AI is hurting its consulting business."
SOLD
Aoris International Fund exited in June, and set out what it got wrong:
>"We sold our position in Accenture late in the quarter. Our investment in Accenture over the last few years has been a costly mistake. Its share price declined by 58% over the last 12 months \[...\] Our misjudgement was to assume Accenture's underlying revenue growth would return to the 6-7% rate it achieved over the period 2011 to 2019. After particularly strong years in 2021 and 2022, revenue growth since 2024 has been stuck at around 1-4%. We had assumed this was a cyclical lull, but it now appears to be longer lasting. Further, management is responding to this demand softness by making larger and more expensive acquisitions; a concerning departure from the company's history. \[...\] Secondly, Accenture will now spend around $9 billion on acquisitions in their fiscal year ended August, more than twice prior guidance, and at valuation multiples far higher than they have historically paid."
Findlay Park American Fund exited in June:
>"Accenture was another knowledge-economy detractor, though the position had already been materially reduced over the previous eight months and the residual holding was exited late in the quarter. The company remains high quality, but confidence in the inevitability of the outcome has diminished as organic growth remains sluggish versus historical trends. Management's decision to spend more than $4bn acquiring operational technology cybersecurity businesses at around 20x annual recurring revenue was also concerning, both because of the price paid and because the acquisitions appeared to move Accenture away from its platform-agnostic services model."
Ave Maria Funds exited in June, with four other names, and gave no comment on the company:
>"In the second quarter, the fund exited investments in Accenture, Alcon, Copart, TIC Solutions, and Zoetis."
Matrix Asset Advisors sold in taxable accounts only, and states that it will buy the shares again:
>"For taxable accounts, we realized a loss in Accenture, a name we expect to repurchase after 31 days."
DISCUSSED WITHOUT A POSITION
Artisan Partners Global Value does not hold the shares. Its letter gives the reason:
>"Plenty of companies in the roadkill category are just too hard for us to figure out. We have spent a decent amount of time on information technology services companies such as Accenture and Capgemini. We do believe there are AI-related risks to their business models. But we also anticipate benefits. We simply find the business models too opaque, the disclosure too limited and the constant acquisitions too muddling. In other words, we can't figure them out enough to have confidence. They sure do look cheap, trading at single-digit P/Es."
The source list below holds the letters that comment on the company. Ave Maria and Matrix state the transaction and nothing else, so I left them out.
Sources:
Harris Associates, March: [https://www.hfbestideas.com/letters?open=C4idSo4dtunN](https://www.hfbestideas.com/letters?open=C4idSo4dtunN)
Harris Associates, June: [https://www.hfbestideas.com/letters?open=TzzUZElEaF5h](https://www.hfbestideas.com/letters?open=TzzUZElEaF5h)
Distillate Capital: [https://www.hfbestideas.com/letters?open=h7BiHw8nmq1J](https://www.hfbestideas.com/letters?open=h7BiHw8nmq1J)
Baillie Gifford: [https://www.hfbestideas.com/letters?open=HXNkGU4cGArT](https://www.hfbestideas.com/letters?open=HXNkGU4cGArT)
Harding Loevner: [https://www.hfbestideas.com/letters?open=jE002E9wzKfe](https://www.hfbestideas.com/letters?open=jE002E9wzKfe)
Aoris: [https://www.hfbestideas.com/letters?open=nrcB6XuYQcQS](https://www.hfbestideas.com/letters?open=nrcB6XuYQcQS)
Findlay Park: [https://www.hfbestideas.com/letters?open=oWMJOoJFTihs](https://www.hfbestideas.com/letters?open=oWMJOoJFTihs)
Artisan Partners Global Value: [https://www.hfbestideas.com/letters?open=sYEdFS306dly](https://www.hfbestideas.com/letters?open=sYEdFS306dly)