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Riverbed Technology, Inc. (RVBD): Are Hedge Funds Right About This Stock?

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Is Riverbed Technology, Inc. (NASDAQ:RVBD) a buy?

If you were to ask many traders, hedge funds are perceived as useless, old financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds with their doors open in present day, Insider Monkey aim at the elite of this group, about 525 funds. It is assumed that this group controls most of the smart money’s total capital, and by monitoring their highest performing picks, we’ve spotted a number of investment strategies that have historically outpaced the broader indices. 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 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 the details here).

Just as useful, bullish insider trading activity is another way to look at the financial markets. There are lots of reasons for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this tactic if piggybackers know where to look (learn more here).

Furthermore, it’s important to examine the newest info surrounding Riverbed Technology, Inc. (NASDAQ:RVBD).

What have hedge funds been doing with Riverbed Technology, Inc. (NASDAQ:RVBD)?

At Q2’s end, a total of 19 of the hedge funds we track were bullish in this stock, a change of -21% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly.

Riverbed Technology, Inc. (NASDAQ:RVBD)When using filings from the hedgies we track, William B. Gray’s Orbis Investment Management had the biggest position in Riverbed Technology, Inc. (NASDAQ:RVBD), worth close to $116.5 million, comprising 0.9% of its total 13F portfolio. The second largest stake is held by David Gallo of Valinor Management LLC, with a $75.2 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Some other peers that are bullish include Steven Cohen’s SAC Capital Advisors, Jim Simons’s Renaissance Technologies and Ryan Frick and Oliver Evans’s Dorsal Capital Management.

Judging by the fact that Riverbed Technology, Inc. (NASDAQ:RVBD) has experienced bearish sentiment from the smart money’s best and brightest, logic holds that there lies a certain “tier” of money managers that elected to cut their full holdings at the end of the second quarter. Interestingly, Ahmet Okumus’s Okumus Fund Management said goodbye to the biggest investment of all the hedgies we monitor, valued at close to $14.9 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $3.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds at the end of the second quarter.

What do corporate executives and insiders think about Riverbed Technology, Inc. (NASDAQ:RVBD)?

Legal insider trading, particularly when it’s bullish, is most useful when the company in question has experienced transactions within the past half-year. Over the last six-month time frame, Riverbed Technology, Inc. (NASDAQ:RVBD) has seen zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Riverbed Technology, Inc. (NASDAQ:RVBD). These stocks are Super Micro Computer, Inc. (NASDAQ:SMCI), Juniper Networks, Inc. (NYSE:JNPR), Finisar Corporation (NASDAQ:FNSR), Palo Alto Networks Inc (NYSE:PANW), and Aruba Networks, Inc. (NASDAQ:ARUN). All of these stocks are in the networking & communication devices industry and their market caps match RVBD’s market cap.

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