Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Workday Inc (NASDAQ:WDAY).
Workday Inc (NASDAQ:WDAY) investors should be aware of an increase in hedge fund interest of late. Workday Inc (NASDAQ:WDAY) was in 80 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 74. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 74 hedge funds in our database with WDAY positions at the end of the third quarter. Our calculations also showed that WDAY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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).
Chase Coleman of Tiger Global
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. Keeping this in mind let’s view the key hedge fund action regarding Workday Inc (NASDAQ:WDAY).
Do Hedge Funds Think WDAY Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 80 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WDAY over the last 22 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Workday Inc (NASDAQ:WDAY) was held by Tiger Global Management LLC, which reported holding $989 million worth of stock at the end of December. It was followed by Bares Capital Management with a $655.9 million position. Other investors bullish on the company included Skye Global Management, Matrix Capital Management, and OZ Management. In terms of the portfolio weights assigned to each position North Peak Capital allocated the biggest weight to Workday Inc (NASDAQ:WDAY), around 13.1% of its 13F portfolio. Bares Capital Management is also relatively very bullish on the stock, setting aside 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 go over hedge fund activity in other stocks similar to Workday Inc (NASDAQ:WDAY). 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 caps are closest to WDAY’s market cap.
| 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 (NASDAQ: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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately WDAY wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on WDAY were disappointed as the stock returned 6.2% 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.
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Disclosure: None. This article was originally published at Insider Monkey.
