Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. At Insider Monkey, we pore over the filings of nearly 835 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not Workday Inc (NYSE:WDAY) makes for a good investment right now.
Is Workday Inc (NYSE:WDAY) the right pick for your portfolio? The best stock pickers are in an optimistic mood. The number of bullish hedge fund positions inched up by 11 recently. Our calculations also showed that WDAY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). WDAY was in 55 hedge funds’ portfolios at the end of December. There were 44 hedge funds in our database with WDAY positions at the end of the previous quarter.
At the moment there are a multitude of indicators stock traders use to analyze stocks. Two of the most under-the-radar indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the S&P 500 by a healthy amount (see the details here).
Philippe Laffont of Coatue Management
We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Workday Inc (NYSE:WDAY).
What does smart money think about Workday Inc (NYSE:WDAY)?
At the end of the fourth quarter, a total of 55 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WDAY over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Bares Capital Management was the largest shareholder of Workday Inc (NYSE:WDAY), with a stake worth $404.2 million reported as of the end of September. Trailing Bares Capital Management was Citadel Investment Group, which amassed a stake valued at $364.9 million. Duquesne Capital, Coatue Management, and Matrix Capital 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 Bares Capital Management allocated the biggest weight to Workday Inc (NYSE:WDAY), around 11.34% of its 13F portfolio. Half Sky Capital is also relatively very bullish on the stock, earmarking 8.88 percent of its 13F equity portfolio to WDAY.
Consequently, some big names were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, established the biggest position in Workday Inc (NYSE:WDAY). Alyeska Investment Group had $101.2 million invested in the company at the end of the quarter. Hari Hariharan’s NWI Management also initiated a $82.2 million position during the quarter. The following funds were also among the new WDAY investors: Peter S. Park’s Park West Asset Management, Jonathan Auerbach’s Hound Partners, and James Parsons’s Junto Capital Management.
Let’s go over 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 Prudential Financial Inc (NYSE:PRU), Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), Public Storage (NYSE:PSA), and Canadian Imperial Bank of Commerce (NYSE:CM). All of these stocks’ market caps match WDAY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRU | 36 | 691519 | 6 |
| BBVA | 8 | 338963 | -2 |
| PSA | 27 | 927343 | 2 |
| CM | 14 | 240820 | -3 |
| Average | 21.25 | 549661 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $550 million. That figure was $2251 million in WDAY’s case. Prudential Financial Inc (NYSE:PRU) is the most popular stock in this table. On the other hand Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Workday Inc (NYSE:WDAY) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 1.0% in 2020 through April 20th but still managed to beat the market by 11 percentage points. Hedge funds were also right about betting on WDAY, though not to the same extent, as the stock returned -8.2% in 2020 (through April 20th) and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
