Is F5 Networks, Inc. (NASDAQ:FFIV) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is F5 Networks, Inc. (NASDAQ:FFIV) worth your attention right now? Prominent investors are selling. The number of long hedge fund bets were trimmed by 1 in recent months. Our calculations also showed that FFIV isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are a lot of indicators market participants employ to grade stocks. Two of the most innovative indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a significant amount (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the new hedge fund action surrounding F5 Networks, Inc. (NASDAQ:FFIV).
How are hedge funds trading F5 Networks, Inc. (NASDAQ:FFIV)?
At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FFIV over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of F5 Networks, Inc. (NASDAQ:FFIV), with a stake worth $349.1 million reported as of the end of March. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $321.5 million. Citadel Investment Group, Arrowstreet Capital, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Since F5 Networks, Inc. (NASDAQ:FFIV) has experienced falling interest from the smart money, it's easy to see that there was a specific group of money managers who sold off their positions entirely in the second quarter. Interestingly, Peter Muller's PDT Partners dumped the biggest stake of all the hedgies tracked by Insider Monkey, comprising close to $8 million in stock, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital was right behind this move, as the fund dropped about $2.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the second quarter.
Let's go over hedge fund activity in other stocks similar to F5 Networks, Inc. (NASDAQ:FFIV). We will take a look at Euronet Worldwide, Inc. (NASDAQ:EEFT), The Western Union Company (NYSE:WU), National Retail Properties, Inc. (NYSE:NNN), and OGE Energy Corp. (NYSE:OGE). All of these stocks' market caps are closest to FFIV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EEFT,33,409978,0 WU,23,383896,3 NNN,16,217203,4 OGE,13,135934,-4 Average,21.25,286753,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $287 million. That figure was $1084 million in FFIV's case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand OGE Energy Corp. (NYSE:OGE) is the least popular one with only 13 bullish hedge fund positions. F5 Networks, Inc. (NASDAQ:FFIV) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FFIV wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FFIV were disappointed as the stock returned -3.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.