Workday (WDAY) Is Stock a Buy or a Sell?

In this article, we’ll take a look at whether hedge funds think Workday Inc (NYSE: WDAY) is a good investment right now. We check the sentiment of hedge funds and billionaire investors before diving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get advice from investment bankers and industry insiders. Sure, they sometimes fail miserably, but their consensual stock picks have historically outperformed the market after adjusting for known risk factors.

Is Workday (WDAY) action a buy or a sell? Leading investors had an optimistic view. The number of long positions in hedge funds has increased by 6 in recent months. Workday Inc (NYSE: WDAY) was listed in 80 hedge fund portfolios at the end of December. The all-time high for this statistic is 74. This means that the bullish number of hedge fund positions in this stock is currently at an all-time high. Our calculations also showed that WDAY is not among the top 30 most popular stocks among hedge funds (click for Q4 ranking). There were 74 hedge funds in our database with WDAY positions at the end of the third quarter.

In the financial world, there are a number of tools available to investors for valuing stocks. Two of the most overlooked tools are hedge fund and insider trading indicators. We have shown that historically those who follow the best picks of the best fund managers can outperform larger indices by a solid amount. Insider Monkey’s monthly stock picks have returned 197% since March 2017 and have outperformed S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points per year (see details here). This is why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Daniel Och, founder of OZ Management

At Insider Monkey, we leave no stone unturned when finding the next great investment idea. Recently, Oregon became the first state to legalize psychedelic mushrooms which were shown to have promising results in the treatment of depression, drug addiction, and PTSD in early university studies. So we check this psychedelic drug stock idea at present. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver 10x efficiency. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to stock market pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Now let’s take a look at the recent hedge fund action around Workday Inc (NYSE: WDAY).

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Do hedge funds think WDAY is a good stock to buy now?

At the end of the fourth quarter, a total of 80 of the hedge funds tracked by Insider Monkey were long on this stock, a change of 8% from the third quarter of 2020. Below, you can see the development of hedge sentiment funds to WDAY over the past 22 quarters. With the capital of smart money changing hands, there is a “top tier” of remarkable hedge fund managers who were substantially adding to their holdings (or had already built up significant positions).

Of these funds, Tiger Global Management LLC held the most valuable stake in Workday Inc (NYSE: WDAY), which was worth $ 989 million at the end of the fourth quarter. In second place, Bares Capital Management raised $ 655.9 million in shares. Skye Global Management, Matrix Capital Management and OZ Management were also very fond of the stock, becoming one of the largest hedge fund holders in the company. In terms of the portfolio weights assigned to each position, North Peak Capital assigned the largest weight to Workday Inc (NYSE: WDAY), or approximately 13.1% of its 13F portfolio. Bares Capital Management is also relatively very bullish on the stock, distributing 12.13% of its 13F equity portfolio to WDAY.

There were no hedge funds that initiated new positions in the stock during the fourth quarter.

Now let’s take a look at hedge fund activity in other stocks – not necessarily in the same industry as Workday Inc (NYSE: WDAY) but similarly valued. These shares are Takeda Pharmaceutical Company Limited (NYSE: TAK), Edwards Lifesciences Corporation (NYSE: EW), PetroChina Company Limited (NYSE: PTR), Itau Unibanco Holding SA (NYSE: ITUB), HCA Healthcare Inc (NYSE: HCA), Dell Technologies Inc. (NYSE: DELL) and Analog Devices, Inc. (NASDAQ: ADI). The market valuations of this group of stocks resemble the stock valuation of WDAY.

[table] Ticker, Number of HF with positions, Total value of HF positions (x1000), Change of HF position TAK, 18.835529, -1 EW, 38.1243466, -8 PTR, 5.61529, -1 ITUB, 19.451744 , 3 HCA, 73.3564991.2 DELL, 50.3909030.7 ADI, 58.5319785.6 Medium, 37.3.2198011,1,1 [/table]

Check the table here if you have formatting issues.

As you can see, these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $ 2,198 million. That figure was $ 4,443 million in the case of WDAY. HCA Healthcare Inc (NYSE: HCA) is the most popular share in this chart. In contrast, PetroChina Company Limited (NYSE: PTR) is the least popular with only 5 bullish hedge fund positions. Compared to these stocks, Workday Inc (NYSE: WDAY) is more popular among hedge funds. Our overall hedge fund sentiment score for WDAY is 90. Stocks with a 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 the 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% from 2021 to March 12 and still managed to beat the market by 1.6 percentage points. Hedge funds were also right to bet on WDAY, but not to the same extent, as the stock has returned 5.5% since the end of December (through March 12) and has also outperformed the market.

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Disclosure: None. This article originally appeared on Insider Monkey.

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