Workiva Inc (WK): Does It Hold Up Against Its Peers Using This Key Metric?

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Workiva Inc (NYSE:WK).

Workiva Inc (NYSE:WK) was in 7 hedge funds’ portfolios at the end of the third quarter of 2016. WK shareholders have witnessed an increase in hedge fund interest recently. There were 4 hedge funds in our database with WK holdings at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Rapid7 Inc (NASDAQ:RPD), Superior Industries International Inc. (NYSE:SUP), and S.Y. Bancorp, Inc. (NASDAQ:SYBT) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with Workiva Inc (NYSE:WK)?

Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a 75% jump from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in WK heading into this year, so hedge fund ownership of the stock is still down in 2016. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cadian Capital, led by Eric Bannasch, holds the number one position in Workiva Inc (NYSE:WK). Cadian Capital has a $44.2 million position in the stock, comprising 2.3% of its 13F portfolio. The second largest stake is held by Alyeska Investment Group, led by Anand Parekh, holding a $4.1 million position. Some other hedge funds and institutional investors that are bullish encompass Millennium Management, one of the biggest hedge funds in the world, Wojciech Uzdelewicz’s Espalier Global Management, and Jack Ripsteen’s Potrero Capital Research. We should note that Potrero Capital Research is among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

With general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Israel Englander’s Millennium Management created the most valuable position in Workiva Inc (NYSE:WK). Millennium Management had $2.1 million invested in the company at the end of the quarter. Espalier Global Management also initiated a $1.8 million position during the quarter. The following funds were also among the new WK investors: Potrero Capital Research and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Workiva Inc (NYSE:WK) but similarly valued. We will take a look at Rapid7 Inc (NASDAQ:RPD), Superior Industries International Inc. (NYSE:SUP), S.Y. Bancorp, Inc. (NASDAQ:SYBT), and Overseas Shipholding Group, Inc. Class A (NYSE:OSG). All of these stocks’ market caps match WK’s market cap.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $56 million in WK’s case. Overseas Shipholding Group, Inc. Class A (NYSE:OSG) is the most popular stock in this table. On the other hand S.Y. Bancorp, Inc. (NASDAQ:SYBT) is the least popular one with only 5 bullish hedge fund positions. Workiva Inc (NYSE:WK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OSG might be a better candidate to consider taking a long position in.

Disclosure: None