Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Workiva Inc (NYSE:WK) based on that data and determine whether they were really smart about the stock.
Workiva Inc (NYSE:WK) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistics is 22. WK investors should be aware of an increase in enthusiasm from smart money recently. There were 16 hedge funds in our database with WK positions at the end of the first quarter. Our calculations also showed that WK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are dozens of gauges market participants have at their disposal to size up publicly traded companies. Two of the most under-the-radar gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top investment managers can outclass the S&P 500 by a significant margin (see the details here).
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We are also checking out this lithium company which could benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we’re going to go over the key hedge fund action surrounding Workiva Inc (NYSE:WK).
Hedge fund activity in Workiva Inc (NYSE:WK)
At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from the first quarter of 2020. On the other hand, there were a total of 20 hedge funds with a bullish position in WK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Workiva Inc (NYSE:WK), with a stake worth $79.6 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $37.3 million. Praesidium Investment Management Company, Arrowstreet Capital, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Workiva Inc (NYSE:WK), around 2.23% of its 13F portfolio. Harspring Capital Management is also relatively very bullish on the stock, designating 1.89 percent of its 13F equity portfolio to WK.
As aggregate interest increased, specific money managers were breaking ground themselves. Praesidium Investment Management Company, managed by Kevin Oram and Peter Uddo, established the most outsized position in Workiva Inc (NYSE:WK). Praesidium Investment Management Company had $34.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $18.9 million investment in the stock during the quarter. The other funds with brand new WK positions are Schonfeld Strategic Advisors, Harry Gail’s Harspring Capital Management, and Josh Goldberg’s G2 Investment Partners Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Workiva Inc (NYSE:WK) but similarly valued. We will take a look at The Chemours Company (NYSE:CC), Casella Waste Systems Inc. (NASDAQ:CWST), eHealth, Inc. (NASDAQ:EHTH), Wintrust Financial Corporation (NASDAQ:WTFC), Trinity Industries, Inc. (NYSE:TRN), Insperity Inc (NYSE:NSP), and Taylor Morrison Home Corp (NYSE:TMHC). This group of stocks’ market caps are similar to WK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CC | 35 | 389444 | 3 |
| CWST | 16 | 168060 | 0 |
| EHTH | 30 | 362328 | -5 |
| WTFC | 23 | 141490 | -4 |
| TRN | 25 | 824807 | 7 |
| NSP | 29 | 280537 | 0 |
| TMHC | 33 | 370179 | 5 |
| Average | 27.3 | 362406 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $362 million. That figure was $226 million in WK’s case. The Chemours Company (NYSE:CC) is the most popular stock in this table. On the other hand Casella Waste Systems Inc. (NASDAQ:CWST) is the least popular one with only 16 bullish hedge fund positions. Workiva Inc (NYSE:WK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WK is 51.8. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately WK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WK investors were disappointed as the stock returned 4.2% in the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
