Why ADP Stock Rose on Reports of Bill Ackman’s Position



Bill Ackman’s position on ADP shares

On Thursday, July 27, 2017, Automatic Data Processing (ADP) stock rose nearly 13.0% after reports suggested that billionaire investor Bill Ackman was investing in ADP stock. The stock rose nearly 9.1% that day.

Ackman, activist investor and CEO (chief executive officer) of Pershing Square Capital Management, is well known in the market (QQQ) (SPY) for his investment strategy. His position in various stocks in the past has heavily impacted the movement of those stocks. His short position in Herbalife (HLF) and long position in Valeant Pharmaceuticals International (VRX) significantly affected their overall performances. Over a two-year period, Valeant Pharmaceuticals fell nearly 93.0%, while Herbalife rose nearly 34.0%.

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Ackman’s present position in ADP stock is increasing expectations among investors whether the stock could provide a strong return in the near future. ADP is a business software and services company that provides business outsourcing services. It missed its 4Q16 earnings estimates, reporting EPS (earnings per share) of $0.66 compared to the market expectation of $0.67.

Performance of ADP stock

On August 1, 2017, ADP stock was trading at $118.91. Its 52-week high is $121.77, and its 52-week low is $85.48. On a year-to-date basis, ADP posted a return of 15.0% as of July 31, 2017. Over a two-year period, the stock rose nearly 43.0%. The broader market S&P 500 index (SPY) (SPY-INDEX) rose nearly 9.3% on a year-to-date basis as of July 31, 2017.

Currently, the stock is trading 13.0% above its 20-day moving average and 42.7% above its 100-day moving average.

In the next part of this series, we’ll analyze Ackman’s largest holdings as of March 31, 2017.


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