Is Fortinet Inc (NASDAQ:FTNT) going to take off soon? Money managers are becoming less confident. The number of long hedge fund bets shrunk by 4 in recent months.
To most market participants, hedge funds are seen as unimportant, old investment tools of years past. While there are over 8000 funds trading today, we hone in on the leaders of this group, close to 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total capital, and by paying attention to their best stock picks, we have discovered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as integral, bullish insider trading activity is another way to parse down the financial markets. As the old adage goes: there are a number of stimuli for an insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this strategy if you know where to look (learn more here).
Consequently, let’s take a peek at the latest action regarding Fortinet Inc (NASDAQ:FTNT).
How are hedge funds trading Fortinet Inc (NASDAQ:FTNT)?
At the end of the fourth quarter, a total of 26 of the hedge funds we track were bullish in this stock, a change of -13% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully.
Of the funds we track, Brookside Capital, managed by Bain Capital, holds the most valuable position in Fortinet Inc (NASDAQ:FTNT). Brookside Capital has a $79 million position in the stock, comprising 1.8% of its 13F portfolio. Coming in second is SAC Capital Advisors, managed by Steven Cohen, which held a $34 million position; 1.8% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Brett Barakett’s Tremblant Capital and Ricky Sandler’s Eminence Capital.
Judging by the fact that Fortinet Inc (NASDAQ:FTNT) has experienced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few funds that slashed their entire stakes heading into 2013. Intriguingly, Scott Fine and Peter Richards’s Empire Capital Management sold off the largest stake of the 450+ funds we key on, totaling an estimated $33 million in stock.. Donald Chiboucis’s fund, Columbus Circle Investors, also dropped its stock, about $16 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 4 funds heading into 2013.
How have insiders been trading Fortinet Inc (NASDAQ:FTNT)?
Insider buying is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest half-year time frame, Fortinet Inc (NASDAQ:FTNT) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the results shown by Insider Monkey’s tactics, retail investors should always pay attention to hedge fund and insider trading activity, and Fortinet Inc (NASDAQ:FTNT) shareholders fit into this picture quite nicely.
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