The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Workiva Inc (NYSE:WK).
Is WK a good stock to buy now? The best stock pickers were in a pessimistic mood. The number of long hedge fund positions decreased by 1 recently. Workiva Inc (NYSE:WK) was in 20 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that WK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we scour multiple sources to uncover 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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind let’s go over the latest hedge fund action regarding Workiva Inc (NYSE:WK).
Do Hedge Funds Think WK Is A Good Stock To Buy Now?
At the end of September, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards WK over the last 21 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Workiva Inc (NYSE:WK), which was worth $82.5 million at the end of the third quarter. On the second spot was Praesidium Investment Management Company which amassed $46.6 million worth of shares. D E Shaw, Arrowstreet Capital, and Two Sigma Advisors 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 Praesidium Investment Management Company allocated the biggest weight to Workiva Inc (NYSE:WK), around 2.78% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, setting aside 1.44 percent of its 13F equity portfolio to WK.
Because Workiva Inc (NYSE:WK) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers that slashed their full holdings by the end of the third quarter. At the top of the heap, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors sold off the largest investment of the 750 funds followed by Insider Monkey, worth about $6.2 million in stock. Harry Gail’s fund, Harspring Capital Management, also said goodbye to its stock, about $5.6 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s check out 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 Corporate Office Properties Trust (NYSE:OFC), Workhorse Group, Inc. (NASDAQ:WKHS), Evercore Inc. (NYSE:EVR), Axsome Therapeutics, Inc. (NASDAQ:AXSM), Palomar Holdings, Inc. (NASDAQ:PLMR), Valmont Industries, Inc. (NYSE:VMI), and BRF SA (NYSE:BRFS). This group of stocks’ market values resemble WK’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $244 million in WK’s case. Evercore Inc. (NYSE:EVR) is the most popular stock in this table. On the other hand Palomar Holdings, Inc. (NASDAQ:PLMR) is the least popular one with only 8 bullish hedge fund positions. Workiva Inc (NYSE:WK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WK is 62.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on WK as the stock returned 42.5% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.