The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Slack Technologies Inc (NYSE:WORK).
Slack Technologies Inc (NYSE:WORK) was in 20 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. WORK investors should be aware of a decrease in hedge fund interest recently. There were 32 hedge funds in our database with WORK holdings at the end of June. Our calculations also showed that WORK 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Keeping this in mind let’s take a peek at the recent hedge fund action surrounding Slack Technologies Inc (NYSE:WORK).
Do Hedge Funds Think WORK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WORK over the last 21 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in Slack Technologies Inc (NYSE:WORK). D E Shaw has a $79.3 million position in the stock, comprising 0.1% of its 13F portfolio. On D E Shaw’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $79 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish comprise Anand Parekh’s Alyeska Investment Group, Josh Tarasoff’s Greenlea Lane Capital and Matthew Hulsizer’s PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Greenlea Lane Capital allocated the biggest weight to Slack Technologies Inc (NYSE:WORK), around 5.21% of its 13F portfolio. Alight Capital is also relatively very bullish on the stock, dishing out 0.96 percent of its 13F equity portfolio to WORK.
Judging by the fact that Slack Technologies Inc (NYSE:WORK) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who were dropping their full holdings last quarter. It’s worth mentioning that Joel Ramin’s 12 West Capital Management cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $55.9 million in stock, and Roberto Mignone’s Bridger Management was right behind this move, as the fund said goodbye to about $19 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 12 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Slack Technologies Inc (NYSE:WORK). These stocks are EXACT Sciences Corporation (NASDAQ:EXAS), Bio-Rad Laboratories, Inc. (NYSE:BIO), Synchrony Financial (NYSE:SYF), XPeng Inc. (NYSE:XPEV), DISH Network Corp. (NASDAQ:DISH), Broadridge Financial Solutions, Inc. (NYSE:BR), and Fifth Third Bancorp (NASDAQ:FITB). All of these stocks’ market caps are closest to WORK’s market cap.
|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 39.6 hedge funds with bullish positions and the average amount invested in these stocks was $950 million. That figure was $165 million in WORK’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand XPeng Inc. (NYSE:XPEV) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Slack Technologies Inc (NYSE:WORK) is even less popular than XPEV. Our overall hedge fund sentiment score for WORK is 9.2. 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. Hedge funds clearly dropped the ball on WORK as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on WORK as the stock returned 57.3% since Q3 (through December 14th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.