F5 Networks, Inc. (NASDAQ:FFIV) investors: listen up.
To many investors, hedge funds are perceived as useless, old investment vehicles of an era lost to time. Although there are over 8,000 hedge funds trading today, this site aim at the bigwigs of this group, about 525 funds. It is assumed that this group controls the lion's share of all hedge funds' total capital, and by tracking their highest quality picks, we've determined a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as useful, positive insider trading sentiment is another way to analyze the stock market universe. Obviously, there are a variety of reasons for an insider to cut shares of his or her company, but just one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this strategy if "monkeys" know where to look (learn more here).
Now that that's out of the way, let's analyze the newest info surrounding F5 Networks, Inc. (NASDAQ:FFIV).
In preparation for the third quarter, a total of 28 of the hedge funds we track were long in this stock, a change of -7% from the previous quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings significantly.
Out of the hedge funds we follow, Lee Ainslie's Maverick Capital had the most valuable position in F5 Networks, Inc. (NASDAQ:FFIV), worth close to $207.1 million, accounting for 2.8% of its total 13F portfolio. Coming in second is Bill Miller of Legg Mason Capital Management, with a $74.5 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other peers that hold long positions include D. E. Shaw's D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Eric Bannasch's Cadian Capital.
Judging by the fact that F5 Networks, Inc. (NASDAQ:FFIV) has faced dropping sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers that slashed their full holdings in Q1. At the top of the heap, Brian Ashford-Russell and Tim Woolley's Polar Capital dumped the biggest investment of the "upper crust" of funds we key on, totaling close to $6.6 million in stock. Donald Chiboucis's fund, Columbus Circle Investors, also dropped its stock, about $6.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds in Q1.
Insider buying made by high-level executives is best served when the company in question has experienced transactions within the past half-year. Over the latest half-year time frame, F5 Networks, Inc. (NASDAQ:FFIV) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to F5 Networks, Inc. (NASDAQ:FFIV). These stocks are Catamaran Corp (USA) (NASDAQ:CTRX), Workday Inc (NYSE:WDAY), Red Hat, Inc. (NYSE:RHT), Nuance Communications Inc. (NASDAQ:NUAN), and BMC Software, Inc. (NASDAQ:BMC). This group of stocks belong to the application software industry and their market caps match FFIV's market cap.