Was The Smart Money Right About Piling Into Slack Technologies (WORK)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Slack Technologies Inc (NYSE:WORK).

Slack Technologies Inc (NYSE:WORK) has seen an increase in hedge fund sentiment recently. Slack Technologies Inc (NYSE:WORK) was in 66 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WORK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Matthew Halbower of Pentwater Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to check out the recent hedge fund action encompassing Slack Technologies Inc (NYSE:WORK).

Do Hedge Funds Think WORK Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 66 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 230% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WORK over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Matthew Halbower’s Pentwater Capital Management has the most valuable position in Slack Technologies Inc (NYSE:WORK), worth close to $764.8 million, corresponding to 9.2% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $393.7 million position; 0.3% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass Ken Griffin’s Citadel Investment Group, Renaissance Technologies and Carl Tiedemann and Michael Tiedemann’s TIG Advisors. In terms of the portfolio weights assigned to each position Twin Capital Management allocated the biggest weight to Slack Technologies Inc (NYSE:WORK), around 27.63% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, setting aside 13.52 percent of its 13F equity portfolio to WORK.

There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Slack Technologies Inc (NYSE:WORK) but similarly valued. These stocks are Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), The Williams Companies, Inc. (NYSE:WMB), Consolidated Edison, Inc. (NYSE:ED), The Kroger Co. (NYSE:KR), Fortinet Inc (NASDAQ:FTNT), Cerner Corporation (NASDAQ:CERN), and Alexandria Real Estate Equities Inc (NYSE:ARE). This group of stocks’ market values are similar to WORK’s market value.

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As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $801 million. That figure was $3978 million in WORK’s case. The Williams Companies, Inc. (NYSE:WMB) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA  (NYSE:FMS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Slack Technologies Inc (NYSE:WORK) is more popular among hedge funds. Our overall hedge fund sentiment score for WORK 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately WORK wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on WORK were disappointed as the stock returned 0.1% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.