In this article we will take a look at whether hedge funds think Workday Inc (NYSE:WDAY) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Workday (WDAY) stock a buy or sell? Prominent investors were taking an optimistic view. The number of long hedge fund positions advanced by 6 in recent months. Workday Inc (NYSE:WDAY) was in 80 hedge funds’ portfolios at the end of December. The all time high for this statistic is 74. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WDAY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 74 hedge funds in our database with WDAY positions at the end of the third quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Daniel Och, Founder of OZ Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage (or at the end of this article). Now let’s take a look at the recent hedge fund action surrounding Workday Inc (NYSE:WDAY).
Do Hedge Funds Think WDAY Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 80 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards WDAY over the last 22 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Tiger Global Management LLC held the most valuable stake in Workday Inc (NYSE:WDAY), which was worth $989 million at the end of the fourth quarter. On the second spot was Bares Capital Management which amassed $655.9 million worth of shares. Skye Global Management, Matrix Capital Management, and OZ Management 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 North Peak Capital allocated the biggest weight to Workday Inc (NYSE:WDAY), around 13.1% of its 13F portfolio. Bares Capital Management is also relatively very bullish on the stock, dishing out 12.13 percent of its 13F equity portfolio to WDAY.
There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Workday Inc (NYSE:WDAY) but similarly valued. These stocks are Takeda Pharmaceutical Company Limited (NYSE:TAK), Edwards Lifesciences Corporation (NYSE:EW), PetroChina Company Limited (NYSE:PTR), Itau Unibanco Holding SA (NYSE:ITUB), HCA Healthcare Inc (NYSE:HCA), Dell Technologies Inc. (NYSE:DELL), and Analog Devices, Inc. (NASDAQ:ADI). This group of stocks’ market valuations resemble WDAY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TAK | 18 | 835529 | -1 |
| EW | 38 | 1243466 | -8 |
| PTR | 5 | 61529 | -1 |
| ITUB | 19 | 451744 | 3 |
| HCA | 73 | 3564991 | 2 |
| DELL | 50 | 3909030 | 7 |
| ADI | 58 | 5319785 | 6 |
| Average | 37.3 | 2198011 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $2198 million. That figure was $4443 million in WDAY’s case. HCA Healthcare Inc (NYSE:HCA) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Workday Inc (NYSE:WDAY) is more popular among hedge funds. Our overall hedge fund sentiment score for WDAY is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on WDAY, though not to the same extent, as the stock returned 5.5% since the end of December (through March 12th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
