While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Upwork Inc. (NASDAQ:UPWK).
Is Upwork Inc. (NASDAQ:UPWK) a worthy investment now? Hedge funds were turning bullish. The number of bullish hedge fund positions advanced by 9 recently. Upwork Inc. (NASDAQ:UPWK) was in 35 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UPWK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to go over the fresh hedge fund action encompassing Upwork Inc. (NASDAQ:UPWK).
Do Hedge Funds Think UPWK Is A Good Stock To Buy Now?
At the end of September, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UPWK over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Upwork Inc. (NASDAQ:UPWK) was held by SRS Investment Management, which reported holding $75.1 million worth of stock at the end of September. It was followed by XN Exponent Advisors with a $74.4 million position. Other investors bullish on the company included Ancient Art (Teton Capital), Renaissance Technologies, and Citadel Investment Group. In terms of the portfolio weights assigned to each position IvyRock Asset Management allocated the biggest weight to Upwork Inc. (NASDAQ:UPWK), around 15.26% of its 13F portfolio. Kent Lake Capital is also relatively very bullish on the stock, dishing out 8.04 percent of its 13F equity portfolio to UPWK.
As aggregate interest increased, some big names have been driving this bullishness. XN Exponent Advisors, managed by Gaurav Kapadia, assembled the largest position in Upwork Inc. (NASDAQ:UPWK). XN Exponent Advisors had $74.4 million invested in the company at the end of the quarter. John Osterweis’s Osterweis Capital Management also initiated a $5.1 million position during the quarter. The other funds with brand new UPWK positions are Paul Tudor Jones’s Tudor Investment Corp, Jinghua Yan’s TwinBeech Capital, and Jack Woodruff’s Candlestick Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Upwork Inc. (NASDAQ:UPWK) but similarly valued. We will take a look at New Fortress Energy LLC (NASDAQ:NFE), Reynolds Consumer Products Inc. (NASDAQ:REYN), Acadia Healthcare Company Inc (NASDAQ:ACHC), MP Materials Corp. (NYSE:MP), Allakos Inc. (NASDAQ:ALLK), Ambarella Inc (NASDAQ:AMBA), and MSA Safety Incorporated (NYSE:MSA). All of these stocks’ market caps resemble UPWK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NFE | 10 | 37286 | 1 |
| REYN | 12 | 97844 | -2 |
| ACHC | 29 | 572319 | -3 |
| MP | 20 | 2180334 | 0 |
| ALLK | 15 | 378212 | 3 |
| AMBA | 37 | 582744 | 0 |
| MSA | 14 | 35354 | 1 |
| Average | 19.6 | 554870 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $555 million. That figure was $418 million in UPWK’s case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand New Fortress Energy LLC (NASDAQ:NFE) is the least popular one with only 10 bullish hedge fund positions. Upwork Inc. (NASDAQ:UPWK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UPWK is 86.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately UPWK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on UPWK were disappointed as the stock returned -17.3% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
