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 Upwork Inc. (NASDAQ:UPWK) in this article.
Is UPWK stock a buy? The best stock pickers were in an optimistic mood. The number of long hedge fund positions inched up by 7 lately. Upwork Inc. (NASDAQ:UPWK) was in 34 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 27. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UPWK isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 27 hedge funds in our database with UPWK positions at the end of the third quarter.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
David Brown of Hawk Ridge Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 we're going to take a look at the new hedge fund action encompassing Upwork Inc. (NASDAQ:UPWK).
Do Hedge Funds Think UPWK Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UPWK over the last 22 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Ancient Art (Teton Capital) was the largest shareholder of Upwork Inc. (NASDAQ:UPWK), with a stake worth $115.3 million reported as of the end of December. Trailing Ancient Art (Teton Capital) was Hawk Ridge Management, which amassed a stake valued at $71.9 million. Renaissance Technologies, Arrowstreet Capital, and SRS Investment Management 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 Ancient Art (Teton Capital) allocated the biggest weight to Upwork Inc. (NASDAQ:UPWK), around 11.34% of its 13F portfolio. Kent Lake Capital is also relatively very bullish on the stock, designating 8.58 percent of its 13F equity portfolio to UPWK.
As industrywide interest jumped, some big names were leading the bulls' herd. SRS Investment Management, managed by Karthik Sarma, assembled the largest position in Upwork Inc. (NASDAQ:UPWK). SRS Investment Management had $37.7 million invested in the company at the end of the quarter. Tim David's Guardian Point Capital also made a $19 million investment in the stock during the quarter. The following funds were also among the new UPWK investors: Benjamin Natter's Kent Lake Capital, Noam Gottesman's GLG Partners, and Neil Mehta's Greanoaks Capital.
Let's check out hedge fund activity in other stocks similar to Upwork Inc. (NASDAQ:UPWK). These stocks are Tenet Healthcare Corp (NYSE:THC), United Bankshares, Inc. (NASDAQ:UBSI), Clean Harbors Inc (NYSE:CLH), SYNNEX Corporation (NYSE:SNX), HollyFrontier Corporation (NYSE:HFC), PNM Resources, Inc. (NYSE:PNM), and PTC Therapeutics, Inc. (NASDAQ:PTCT). This group of stocks' market valuations resemble UPWK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position THC,34,1210954,1 UBSI,9,86644,-10 CLH,22,308152,-2 SNX,24,444472,-3 HFC,34,269066,6 PNM,30,1010717,7 PTCT,23,260701,-2 Average,25.1,512958,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $513 million. That figure was $549 million in UPWK's case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. Upwork Inc. (NASDAQ:UPWK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UPWK 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on UPWK as the stock returned 34.8% since the end of Q4 (through 4/1) 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.