In this article we will analyze whether Workday Inc (NASDAQ:WDAY) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is WDAY a good stock to buy? Workday Inc (NASDAQ:WDAY) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 72 hedge funds’ portfolios at the end of September. Our calculations also showed that WDAY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Boston Scientific Corporation (NYSE:BSX), Activision Blizzard, Inc. (NASDAQ:ATVI), and Stellantis N.V. (NYSE:STLA) to gather more data points.
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 let’s take a look at the fresh hedge fund action surrounding Workday Inc (NASDAQ:WDAY).
Chase Coleman of Tiger Global
Do Hedge Funds Think WDAY Is A Good Stock To Buy Now?
At Q3’s end, a total of 72 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 74 hedge funds with a bullish position in WDAY a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Workday Inc (NASDAQ:WDAY) was held by Lone Pine Capital, which reported holding $1242.9 million worth of stock at the end of September. It was followed by Tiger Global Management LLC with a $1054.2 million position. Other investors bullish on the company included Bares Capital Management, Sculptor Capital, and Palestra Capital Management. In terms of the portfolio weights assigned to each position North Peak Capital allocated the biggest weight to Workday Inc (NASDAQ:WDAY), around 17.4% of its 13F portfolio. Fernbridge Capital Management is also relatively very bullish on the stock, dishing out 14.1 percent of its 13F equity portfolio to WDAY.
Judging by the fact that Workday Inc (NASDAQ:WDAY) has witnessed falling interest from the smart money, it’s safe to say that there lies a certain “tier” of hedgies that slashed their entire stakes heading into Q4. Intriguingly, Jimmy Levin’s Sculptor Capital dumped the biggest position of the 750 funds watched by Insider Monkey, comprising close to $271.4 million in stock. Alex Sacerdote’s fund, Whale Rock Capital Management, also cut its stock, about $216.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Workday Inc (NASDAQ:WDAY). We will take a look at Boston Scientific Corporation (NYSE:BSX), Activision Blizzard, Inc. (NASDAQ:ATVI), Stellantis N.V. (NYSE:STLA), Ecolab Inc. (NYSE:ECL), Eaton Corporation plc (NYSE:ETN), Norfolk Southern Corp. (NYSE:NSC), and Dominion Energy Inc. (NYSE:D). This group of stocks’ market caps are closest to WDAY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSX | 47 | 3051321 | -4 |
| ATVI | 80 | 4284643 | 2 |
| STLA | 24 | 1178890 | -4 |
| ECL | 39 | 2551887 | -9 |
| ETN | 45 | 1089775 | 5 |
| NSC | 46 | 1049404 | -12 |
| D | 27 | 545194 | -7 |
| Average | 44 | 1964445 | -4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $1964 million. That figure was $6390 million in WDAY’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Stellantis N.V. (NYSE:STLA) is the least popular one with only 24 bullish hedge fund positions. Workday Inc (NASDAQ:WDAY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WDAY is 74.9. 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. 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 still beat the market by 5.6 percentage points. Hedge funds were also right about betting on WDAY as the stock returned 9.7% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
