Is Slack Technologies (WORK) Stock A Buy or Sell?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Slack Technologies Inc (NYSE:WORK) in this article.

Is WORK stock a buy or sell? 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 is 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. WORK has experienced an increase in support from the world’s most elite money managers lately. There were 20 hedge funds in our database with WORK holdings at the end of September. Our calculations also showed that WORK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Matthew Halbower Pentwater Capital

Matthew Halbower of Pentwater Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now 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 (or at the end of this article). Now we’re going to take a look at the new hedge fund action regarding Slack Technologies Inc (NYSE:WORK).

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

At the end of December, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 230% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in WORK over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Pentwater Capital Management, managed by Matthew Halbower, holds the largest position in Slack Technologies Inc (NYSE:WORK). Pentwater Capital Management has a $764.8 million position in the stock, comprising 9.2% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $393.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain 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, designating 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 now take a look at 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. (NYSE:FMS), 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.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FMS 9 15599 0
WMB 38 563371 0
ED 32 393295 14
KR 36 2381034 1
FTNT 32 1220671 -4
CERN 34 834428 0
ARE 14 198522 -11
Average 27.9 800989 0

View table here if you experience formatting issues.

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. Williams Companies, Inc. (NYSE:WMB) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (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 7% in 2021 through March 12th and still beat the market by 1.6 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 -3.5% since the end of the fourth quarter (through 3/12) 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.