Is Fortinet Inc (NASDAQ:FTNT) 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 employ 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.
Fortinet Inc (NASDAQ:FTNT) investors should pay attention to an increase in enthusiasm from smart money lately. Our calculations also showed that FTNT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are numerous metrics stock traders employ to appraise stocks. Two of the less known metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top money managers can outclass their index-focused peers by a healthy amount (see the details here).
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to analyze the key hedge fund action surrounding Fortinet Inc (NASDAQ:FTNT).
How have hedgies been trading Fortinet Inc (NASDAQ:FTNT)?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FTNT over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Fortinet Inc (NASDAQ:FTNT), worth close to $325.8 million, amounting to 0.3% of its total 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $218.8 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish contain John Overdeck and David Siegel's Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Clifton S. Robbins's Blue Harbour Group. In terms of the portfolio weights assigned to each position Blue Harbour Group allocated the biggest weight to Fortinet Inc (NASDAQ:FTNT), around 4.76% of its portfolio. Highland Capital Management is also relatively very bullish on the stock, setting aside 2.15 percent of its 13F equity portfolio to FTNT.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Blue Harbour Group, managed by Clifton S. Robbins, created the most valuable position in Fortinet Inc (NASDAQ:FTNT). Blue Harbour Group had $81.1 million invested in the company at the end of the quarter. Mark Coe's Intrinsic Edge Capital also made a $6.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace, Karim Abbadi and Edward McBride's Centiva Capital, and Mario Gabelli's GAMCO Investors.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Fortinet Inc (NASDAQ:FTNT) but similarly valued. We will take a look at Genmab A/S (NASDAQ:GMAB), International Flavors & Fragrances Inc (NYSE:IFF), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), and WellCare Health Plans, Inc. (NYSE:WCG). All of these stocks' market caps match FTNT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GMAB,10,136229,10 IFF,19,202887,1 SSNC,45,1483434,4 WCG,41,1791970,-5 Average,28.75,903630,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $904 million. That figure was $1188 million in FTNT's case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 10 bullish hedge fund positions. Fortinet Inc (NASDAQ:FTNT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on FTNT as the stock returned 36.9% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.