The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Workday Inc (NYSE:WDAY).
Workday Inc (NYSE:WDAY) has experienced a decrease in enthusiasm from smart money in recent months. Workday Inc (NYSE:WDAY) was in 69 hedge funds’ portfolios at the end of March. The all time high for this statistic is 80. Our calculations also showed that WDAY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ole Andreas Halvorsen of Viking Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Now let’s take a peek at the fresh 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 first quarter, a total of 69 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WDAY over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Tiger Global Management LLC was the largest shareholder of Workday Inc (NYSE:WDAY), with a stake worth $1025.4 million reported as of the end of March. Trailing Tiger Global Management LLC was Bares Capital Management, which amassed a stake valued at $671 million. Lone Pine Capital, Whale Rock Capital Management, and Skye Global 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 26.71% of its 13F portfolio. Bares Capital Management is also relatively very bullish on the stock, setting aside 12.55 percent of its 13F equity portfolio to WDAY.
Because Workday Inc (NYSE:WDAY) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who were dropping their positions entirely heading into Q2. At the top of the heap, Andreas Halvorsen’s Viking Global dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $169.6 million in stock, and David Blood and Al Gore’s Generation Investment Management was right behind this move, as the fund dropped about $119.3 million worth. These transactions are important to note, as total hedge fund interest dropped by 11 funds heading into Q2.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Workday Inc (NYSE:WDAY) but similarly valued. We will take a look at Global Payments Inc (NYSE:GPN), Banco Santander, S.A. (NYSE:SAN), Capital One Financial Corp. (NYSE:COF), Twilio Inc. (NYSE:TWLO), Takeda Pharmaceutical Company Limited (NYSE:TAK), Bank of Montreal (NYSE:BMO), and Analog Devices, Inc. (NASDAQ:ADI). All of these stocks’ market caps resemble WDAY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GPN | 62 | 4558094 | 7 |
| SAN | 15 | 490548 | 1 |
| COF | 59 | 3139814 | 3 |
| TWLO | 99 | 5812460 | 5 |
| TAK | 19 | 860444 | 1 |
| BMO | 15 | 204401 | 4 |
| ADI | 50 | 4860676 | -8 |
| Average | 45.6 | 2846634 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.6 hedge funds with bullish positions and the average amount invested in these stocks was $2847 million. That figure was $5180 million in WDAY’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 15 bullish hedge fund positions. Workday Inc (NYSE: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 52. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.8% in 2021 through August 6th and beat the market again by 6.7 percentage points. Unfortunately WDAY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WDAY were disappointed as the stock returned -5.1% since the end of March (through 8/6) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Workday Inc. (NYSE:WDAY)
Follow Workday Inc. (NYSE:WDAY)
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Disclosure: None. This article was originally published at Insider Monkey.
