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Slack Technologies (WORK) Has Risen 9% in Last One Year, Underperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of Horizon Kinetics top stock picks. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Slack Technologies Inc. (NYSE:WORK) stock. Slack Technologies Inc. (NYSE:WORK) is a software company.

In July 2019, Horizon Kinetics had released its Q2 2019 investor letter. Slack Technologies Inc. (NYSE:WORK) stock has posted a return of 8.6% in the trailing one year period, underperforming the S&P 500 Index which returned 16.0% in the same period. On a year-to-date basis, Slack Technologies Inc. (NYSE:WORK) stock has risen by 25.8%.

Let’s take a look at comments made by Horizon Kinetics about Slack Technologies Inc. (NYSE:WORK) stock in the Q2 2019 investor letter.

“A newer competitor is Slack Technologies, which last month listed on the NYSE with the ticker WORK. It did not offer shares in an IPO, to raise money, since it doesn’t seem to need the money; it just listed its shares. It is not small; it has a $17 billion market value.

Slack is a corporate email service. Supposedly it has more interesting features than Gmail, such as integrated group and project collaboration software, but Google can surely mimic any features on Slack. Nevertheless, Slack is actually selling email as a service; Gmail is free. Why is that?

One way or another, whether because Gmail or its commercial users read your emails or because they allow certain ads to come into or populate your Gmail account, Google generates revenues from your email usage. This is because there is a substantial cost to store those messages, to service the email accounts, transmit the email, and so on. The Slack business model is to charge for email and theoretically, by eliminating ads, make customers’ employees more productive by allowing them to concentrate on corporate email and related functionality, and nothing else.

Quite a number of corporations are switching their email to Slack. If this process were to continue, as seems likely, that would concentrate a lot of people on the Slack platform. What else could such an established network or population provide, in terms of demand for additional services? Could Slack provide a spreadsheet as part of the office package in addition to the email service? Obviously, they could. What would that do to Microsoft?”

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Yuganov Konstantin/Shutterstock.com

In Q2 2020, the number of bullish hedge fund positions on Slack Technologies Inc. (NYSE:WORK) stock increased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Slack’s growth potential. Our calculations showed that Slack Technologies Inc. (NYSE:WORK) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.